Darshan Shanker, Pavel and Delian Asparouhov, Alex Konrad, Jordan Schneider, Willem Van Lancker, Christian Garrett, @carrynointerest, 11x Controversy, Robo Arms

34:02That kind of speed brings both opportunity and challenge, especially early on. Yeah, this is a cool like going direct, addressing the news. Like clearly people are going to be talking about it. He puts out all this information. Also funny to dig into, they've raised 76 million and he says like, we barely touched our investment capital and have nearly 70 million on the balance sheet. And I mean, I guess it's only been a couple months, like less than a year, so they're not burning a lot but it is interesting that like yeah like even even if the arr is a little off or something or there's some churn like they could totally figure this out like wait they could wait like what based on their burn probably like a decade for like agents to get better and like llms to improve like as long as they can keep the energy in the team and like get through it like it's probably fine timing of this is fascinating and that tech crunch just changed hands yep and they decide yep we're gonna just like immediately do a like an aggressive hit piece which is exact opposite of what people have liked about tech crunch tech crunch adam adam ryan talked about this on the show you know they they talked about how he he said that the tech crunch was the make your mom proud engine it was a place to launch companies and it's a weird position to be in to try to do like investigative journalism and be a launch platform.

35:24Yep. Oh, totally. And so again, uh, yeah, I'm, I'm sure this drives a lot of clicks. Um, yeah, but, uh, but yeah, it's, it's kind of, yeah, it's just, again, it's an awkward, uh, awkward place to be in. Yeah. I mean, he does admit, uh, some amount of fault here saying like, we regret not having a better process to remove logos from our website more promptly after customers churn, but he's, He says they've never put a customer on there who didn't pay. Yeah. It's a great clarification. And that makes sense. Like, you know, updating front end. It should be easy with AI, but sometimes stuff gets slipped and you forget that, oh, yeah, they churned.

36:01Like, we should probably remove them. And then also he says our investors are not suing us. They categorically denied this to TechCrunch, yet this rumor was included in the article. And so a wag of the finger to TechCrunch on that one. They should have been firmer on that. Yeah. But good luck to them. Good luck to everyone building AI SDRs. And let us know if you're building an AI SDR. I almost said his real name, but we're going to have somebody named Kerry No Interest on the show later today to just talk about the AI sales automation market generally. He's been somewhat a critic of SaaS, but he also is actively buying and transforming existing SaaS companies and is building some stuff in the space himself.

36:45So excited to have him on. in a couple hours. Yeah, and for Hassan and the 11X team, I think they have$70 million on the balance sheet still, something like that. They are clearly going through a tumultuous time with this negative article. They got to rebuild. They got to redouble their efforts. And I think the number one thing that they could do to really get through this hard time and accelerate is just keep costs low, get on ramp.com, time is money, save both, easy to use corporate cards, bill payments, accounting, and a whole lot more. all in one place. Go to ramp.com and sign up. Yeah, I mean, the strongest signal that 11X could send to the market right now is getting Saquon to come in.

37:30That would be fantastic. I thought you were going to say the strongest signal that could send to the market is just putting out a press release saying like, hey, we're on ramp now. Yeah. Just, hey, we're taking everything seriously. This is a serious company and we are on a serious financial platform. Yeah. We don't mess around. We don't mess around. But an even stronger signal would be getting Saquon. Saquon, to our knowledge, is invested in two companies. Yes. Ramp and Anderil. Yes. To PowerLaw. The third company, the trilogy. The third, yeah. The trilogy of Saquon investments. If you're a founder in Silicon Valley, you have to be calling Saquon right now to be number three.

38:04Yeah. Give him shares. I mean, every other VC firm that invested in Anderil or - Get Saquon to invest in your company. Go into debt if you have to. Yes. Every other Silicon Valley firm that's invested in Ramp and Anderle has a ton of corpses and bad investments. Saquon appears to be just... The guy doesn't miss. Doesn't miss. It's great. Anyway, speaking of Ramp Investor, Thrive Capital, and AI. Thrive Capital is leading a new deal in Wall Street AI startup, Rogo. So, is Wall Street ready to work with artificial intelligence, writes Natasha Moskrenis over at The Information. Two of OpenAI's biggest investors think so.

38:47Thrive Capital is set to lead a$40 million financing into Rogo AI, an artificial intelligence startup selling AI software for investment bankers and Wall Street analysts at a valuation of up to$350 million. You know what investment bankers need? They need that, what was it? Optify. That would be the big opportunity in Wall Street. If you want to sell into Wall Street banks, go to the Optify guys and say, hey, we're going to put cameras in every cubicle in your investment bank. Make sure these guys are really working 80 hours a week. They always talk such a big game. Oh, investment bankers work 100 hours a week.

39:21Oh, show me the data. Yeah. Show me the data. Yeah. I don't know if I buy it. It could all just be a LARP. I want to see it. That's right. Anyway, Kostla's already in. Thrive is a big open AI investor. They're participating in the new round, styling itself as Wall Street's first AI analyst. Rogo aims to shorten the time that investment in corporate bankers spend on the grunt work of research and preparing client materials. Love that. Three-year-old startup uses LLMs. This feels like a better attack vector for the big slide deck problem, right? Yep. A lot of white-collar work is making slide decks.

39:58Yep. A lot of time and energy goes into it, but the challenge of making decks is not generating pretty pages. It's what is the content that goes into it. You're going through all this data. You're creating models. You're creating charts, graphs, et cetera. And it seems so obvious in the context of Harvey. I'm surprised that we haven't seen anyone do this before because with Harvey, obviously, it's a generative AI startup. Customizes AI models using legal data such as case histories to save lawyers prep time. Harvey's ARR topped 50 million in December. We've heard that it's a pretty expensive product, but they're selling to law firms and saves them a lot of time, so it's probably worth it.

40:35And Harvey is now at a$2.7 billion valuation and it makes so much sense that there would be a Harvey for investment banking. And one of the big things is, if you're an investment banker or a lawyer, you're going to use ChatGPT Deep Research if you could, but oftentimes you cannot put client materials into OpenAI's models that they'll train on. Because all of a sudden you have some secret information that's meant to be very private and they get trained on it. And then in the next version, OpenAI GPT 4.8 comes out and you ask it like, how much does this person make at this company? And it's just like, here we go.

41:12Or like, you know, what's the intellectual property behind X, Y, and Z? It's like, oh yeah, like the lawyer who was working on that intellectual property, they uploaded it all and we trained on it by accident. It wouldn't even be OpenAI trying to do that. They just wouldn't. They would just be, oh, it's in the feed. We got the data. let's just train on it um and so makes a ton of sense that you would run a sequestered llm that could that could be adapted to all the data that the bank has but then also not not leak data from one client to another yeah what are you gonna say i'm curious to know what their actual policy is around that they obviously want to use the data that they ingest to improve the product yep but are they using it to inform outputs to other users like actual factual outputs yeah i don't know i mean i think i don't know i don't know i think harvey is not doing any of that's like the risk that's the risk that's the risk but we don't know if opening eyes yeah actually doing that i mean in the in the long term you could imagine a kind of data sanitization and anonymization strategy that takes in private data and still allows it to improve the model.

42:29But it's probably very, very tricky because if any of that data leaks in and you ask it, it's very easy to figure out what's happening with these models. For a long time, if you went to OpenAI's Whisper and you just had it record some audio and then you didn't say anything and and then you click, okay, transcribe that, it would say, thanks for watching, please subscribe. And it's like, okay, that's clearly YouTube data. And so you can imagine this data leaking out. And already, I mean, I'm sure OpenAI is trying really, really hard not to let personal information leak into the training data because I noticed that OpenAI has a series of personalization features where it tries to learn about you, but I will often lie to it.

43:16Can you imagine how bad it would be for an investment bank if you were able to query about Ask OpenAI about something and it just pulls up, you know, oh, yeah, this company tried to sell itself three to four different times. They ran all these different processes. Goldman was lead left in the deal. They bailed. Here's the name of the banker that was looking at it. Internally, they said it wasn't that good, but they tried to shell it on somebody. Yeah, it'd be a disaster. So, obviously, a clear need. And a lot of people are swarming in here, such as Hebea, which we talked to George Savulka. Model ML, ProSites, going after the tasks typically handled by overworked analysts and junior bankers.

44:04And several banks, such as Citigroup and Bank of America, say they're also developing AI tools internally for similar purposes. For Thrive Capital, which made big headlines for bets on OpenAI and Stripe at relatively high valuations, the Rogo deal shows the firm also wants to make investments in younger AI companies. The New York investment firm is also in talks to invest in the newest financing for popular coding assistant Cursor. We heard about this earlier at, I think, a$10 billion valuation. And so Kushner's all over the place. He's going down to the$40 million round. He'll do a$1 billion round.

44:37He's an absolute dog. size lord but let's ring the size gong for kushner and well if you want to invest in companies that kushner invested in 10 years ago why not check out public public.com baby investing for those who take it seriously they got a knack for investing in stuff before it ends up ipoing yep which is a pretty good business yeah pretty good business um i think he described it as like buy low sell high yeah i think that's the strategy over there or just hold forever hold to three Ts yeah let's do it well they got multi-asset investing industry leading yields they're trusted by millions head over to public.com to get started thank you to public for supporting the show we love you guys thank you to public anyway speaking of Mag7 big tech stocks big market movers Apple Meta Google they're buying remote controlled robotic arms we talked about this briefly on a previous show the arm farm at Google I love this one wait by the way I didn't realize this article is written by someone at the information name Rocket.

45:39Cool. I like that name. Rocket Drew. Being called Rocket. That's a great name. And then writing about deep tech is just. Amazing. Great nominative determinism. Perfect. Your future is bright for Rocket Drew over at the information. They write, during NVIDIA's conference for developers last week, Jensen Wong showed off a software that creates computer simulations of robots. Those simulations aim to teach robots how to perform tasks from washing dishes to picking up household objects. But some robot makers I spoke to say it's better to train robots to do such tasks by having a person control them remotely, also known as teleoperation.

46:15And this has been like the most popular topic, but also controversial. Oh, Elon did the Optimus event and they were teleoperated. Is this like maybe teleoperation is actually the path to robotic AGI. And so it's good to be on that path. But then everyone else kind of is like, wait, what? It's teleoperation? I mean, imagine if we could put, each of us put an optimist in each other's houses and instantly teleport into it. I could come over, you're sleeping. I go, John, we got breaking news. We got breaking news. That'd be great. Hey, not too distant future. I hope so. In a sign of growing interest in tele-operation, scale AI is considering jumping into that market, according to people who have spoken to the company staff.

47:01I was talking to Alex Wang about this a couple of years ago, actually. He had a great interview on Invest Like the Best, and he talked about the data wall in robotics, the fact that, yes, there's a trillion tokens of words on Reddit and the internet broadly that are very easy to crawl, and that's why the LLMs have advanced so quickly. That data set does not exist anywhere for human motion data. Well, I'll go out and say I have content of me kick-flipping, surfing, snowboarding, a bunch of cool stuff. But were you wearing a mocap suit? Because we got to know where the joints were going. The video is not enough.

47:39Now they can do translation from video. Put me in a suit. I would like to train Tesla Optimus. I think that actually might be the future. And that might be what scale is going to do. Scale might have an army of, we talked about this with Mercore too. You get paid to serve. Yeah. Right now, right now knowledge workers globally can just train models by writing code, answering questions. I mean, that's the Mercore thing. is like you are going to hire people to answer math questions the greatest opportunity of the next five years is to wear the suit and just do awesome stuff just do sick extreme sports in a mocap suit can you imagine you're like out snowboarding in this suit and you just just have like terrible like you like yeah or like flailing on some jump you're like all right we gotta like cut that out like yeah yeah yeah pull that from the training data it's real like it It should be in the data, but at the same time, I don't want to set a poor example.

48:34Exactly. You got to cull all those data points. Remember I talked about, too, I want to have, I think that the real benchmark that matters for all humanoids is the ability to do extreme activities. I agree. Cliff jumping, a robot should be able to. 900. Yeah. Backflip. Barrel roll. Deadlift. All the tricks. 1 ,000 pounds. Yeah, when a robot can just be in the 1 ,000-pound club. Clean and jerk, for sure. Yeah. Yeah, these are important evals. Scale has an army of human contractors who create data to train AI and evaluate the performance of AI models in difficult tasks. The company has discussed using that workforce to handle teleoperation for training robots.

49:18And I think we were talking to a company that was doing teleoperation for those small delivery robots, which have been getting more and more popular. and I've long said, I mean, George Hots had a take that Google Waymo was overly teleoperated in the sense that there was a human in the loop too much, basically, a human in the loop overseeing, you know, one or four or eight or 16 Waymos at a time and basically there's always a human behind the scenes in Waymo that's ready to like hop in if there's a problem. I don't really have a problem with that. Like, let's see how the economics pencil out. If there needs to be a human in the loop for most of these robotic things, and that helps us develop the training data to get to really, really autonomous systems over time, I'm fine with it.

50:06I'm not like an AI purist in that regard. And so large firms such as Tesla, OpenAI, Meta, and Google, and Apple are trying to develop hardware or software for humanoid or home robots. There's also a bunch of startups doing this stuff. Sensei is another rival, says it wants to be scale AI for robotics training data, and aims to distribute cheap teleoperated devices to a network of human data collectors. This is your idea. Who will perform tasks such as folding laundry on behalf of robot developers. Yeah, we need Sensei for extreme sports. We need Scale AI for kickflips. Yep, I like it. Scale AI is up at$14 billion valuation.

50:43The kickflip is the final male benchmark. I think it is. You can be in the thousand pound club, but if you can't kickflip, what are you doing? Well, dunking. I would say you handle the kickflips, I'll handle the dunking. Okay, yeah, together we make a good team. But until I see an Optimus or a figure robot dunking, I still got a job. Let's see. Yeah, figure trained their new, they trained their robots on Biden's walk. Yeah, on Joe Biden, I saw. And they were saying today, this is the last time. This is the last time it will look like Joe Biden. Because they're going to train on someone athletic next?

51:16Yeah. That's interesting. Cool. Anyway, in the relatively small world of robotics, teleoperation equipment is hot. Trosin Robotics, a longtime seller of robot parts in recent years, began selling Aloha, a teleoperated device with four arms that allows a human operator to use two arms to control the other two. Interesting. The device's sensors collect information while the arms move, and the robot is trained to repeat the motions. There are multiple versions of Aloha, including stationary and mobile, the latter of which was designed at Stanford. Trosin is based in Downers Grove, Illinois. Last year sold more than 100 stationary and mobile Aloha devices together, which have a sticker price of more than 3.3 million from only a handful of sales.

51:57And so they're doing well. There's also robotics. Some roboticists are collecting tele-op data using more rudimentary gear, including some game controllers. Dexterity, which develops robots that pick and stack packages and trucks and other areas, bought Xbox controllers and connected them to robots. Very cool. Human staff use the controllers to direct its machines to stack boxes. And so maybe in the future, you'll just be downloading the latest Xbox game from Scale.ai and just teleoperating for points in the game, basically. The golden age is going to involve people moving to very inexpensive countries and just getting paid to do fun stuff all the time.

52:40There was a performance artist named Ryder Rips who when VR was getting hot, built a VR simulation of what it was like to be in a pick and pack facility in like an Amazon workplace. It was very bizarre. And so you would have to like pick up the box. And it was the only, the game was just work. It was just work. That was it. It was very interesting. It was very like, he's like a thought provoking. How many DAUs did he have? I mean, it was like something that was shown at like fine art museums, basically. He's like a, he's an artist essentially. But it's like thought provoking work. He's a wild guy, but he's a character.

53:16Anyway, you know what? I think the final eval will be for these humanoid robotics, these robotic arms. I know what you're thinking. I think it'll be flexing with a nice watch on the robotic arm's wrist. Of course. We got to get robotic. You know these robots aren't approaching true AGI. Until they're rocking an aquanaut. Yeah, exactly. Yeah, I mean, honestly, if you're spending, what is this,$3 million on a robotic arm, like throw up a tech on there like why not an easy way at least at least put a daytona on the thing like it's an easy way to signal the buyers yeah hey shared value exactly hey yeah yeah uh you know this robot it's got some class yeah it's not just like automating not just stealing jobs it's also you know raising the aesthetic uh floor in your office i love it uh and so where should they go to buy watches for their robotic arms, Jordy?

54:14They should go to getbezel.com, download the Bezel app, build out your list of favorite watches. Bezel should integrate with Scale AI. And so you can just, you're doing the training data and then you're immediately cashing out for watches. I volunteer to provide the training data for buying watches on Bezel. And yeah, training, okay, how do you properly check the time on your watch? I don't know if a robotic arm could do that effectively. That's right. And so we need training data for that. And of course, we're going to head over to getbezel.com. Shop over 23 ,500 luxury watches, fully authenticated, in-house by Bezel's team of experts.

54:51Fantastic. Anyway, we got five minutes. We got some breaking news. Taylor Lorenz just commented on Alex Conrad's post. Okay. Announcing that he's coming on TVPN saying powerful collab. And she hit it with a repost. So shout out to a tech adjacent journalist. Taylor Lorenz, the one and only.

55:19separately Shkreli is saying that CoreWeave is 5x oversubscribed and will IPO it was going back and forth so we're so we're having Tane on the show from wing he does a lot of a lot of deep dives on s1s and I asked him to prepare something for for CoreWeave which I think will be very interesting but it sounds like we have Christian Garrett in the temple of technology welcome to the show, Christian. There he is. How you doing? Good to see you guys. I'm good. I'm good. How's it going, John? It's great. Good. I'm happy. It's a beautiful day. Where are you calling in from? I'm in San Francisco. So I'm holding it down.

55:57And depending who you ask, this is the future or this is Detroit. So I'm enjoying finding out what's going to happen. Have you checked your Signal group chats for mainstream media reporters yet? Yeah. No, man, I really need to step my Signal group chat game up. I can tell you that much. Yeah, yeah. Just take a pass at the member list. If you see Taylor Lorenz in there, maybe create a new chat. You don't need to kick her out, but start a new one at least. Move the important conversations elsewhere. Well, thank you for joining. Can you give a little bit of an overview of who you are, what you do, just for the folks on the show who might not be familiar, and then we'll go into some questions.

56:37Yeah, so I'm a partner at 137 Ventures. We're a growth stage venture capital firm. And we want to invest in what we believe are generational category-defining companies that can be long compounders and have defensible, sustainable competitive advantages. Like every firm, we have a differentiated strategy. A lot of what we focus on is as a liquidity partner to companies. We do do growth capital. We do invest in primary rounds. But we saw a long time ago really up in the heels of Facebook. And after spinning out a founder's fund, we saw the opportunity to partner with companies on the liquidity side as a way to invest in them and build positions in them.

57:16And that's what we've been doing for a while now. And that was a contrarian bet that companies are going to stay private longer, and there would be growing demand for liquidity. Now it's somewhat consensus and popular and understood. Yeah, I think Peter was basically banging the table saying, never go public. And now you have Elon kind of saying the same thing. hey, Tesla's kind of rough go, obviously did very well, but got kind of, you know, beat up in the courts and whatnot. And so it's great to see that it's at least an option for those founder led companies to stay private longer. And thank you for your service to the capital markets.

57:50It's fantastic. You got a question, Jordan? Yeah, I'm curious. There's been a meme for a very long time that, oh, yeah, I'm an early investor in SpaceX, but like maybe there's like a bunch of SPBs separating you and like the actual, like actual, you know, certificate, right? They certainly don't have the certificate. How do you think the average investor has done over the, that's like investing into these sort of like, which is not what you guys are doing, but when, when, when these sort of power law companies end up just crushing and growing tremendously, does it matter that you're stacked in layers and layers of fees?

58:27Do you get smoked? Can you come out alive? You know, what's been? Yeah. Well, let me I'll take a step back to and kind of make a broader point. I will say it's funny you pick SpaceX. I do have a rocket engine right beside me. Oh, yes. We do have a SpaceX rocket engine here in the office. So, like I said, let's take a step back. I'd say for the last two decades, companies have trended towards staying private longer and longer, like we just talked about. And in order to do that, companies need growth capital and they also need liquidity capital. And the secondary market is just a tool for private tech companies that works just like the public markets in that it just provides liquidity to existing shareholders.

59:05There are two distinct segments of that market, which is what you're hitting at. One segment's done in partnership with companies, which is where we at 1-7 Ventures focus on. And another segment operates outside of that. You don't want to operate outside of that. We've been longtime and real investors, and they have tweeted a ton about fake allocations in their primary rounds being marketed to investors. Right. And so, yeah, I will say what you're hitting on is mainly just the really just a proxy for demand. And so, you know, investors want to invest in great companies regardless of how. And as demand grows, investors look for supply.

59:39And there's only so much supply for primary, which I can talk a little about why that is. And secondary is another way to access a company's equity. And so people will do things, to your point, on investing in various SPVs or whatever it is as a way to access. And I think some of that is good and blessed by the company. as just another vehicle avenue to put capital in these businesses. And then a lot of that operates outside of that and is kind of a black hole and maybe not the best place to be in because you, one, don't collaborate with the company, and then two, you don't have access to information, right?

1:00:08And so, and the third is potentially, like Andrew was tweeting about, is there could be fraud as well. Sure. Can you talk a little bit about why, like how companies think about doing these tender offers, when they do them, when's the right time, and how do they go over? Culturally, obviously, there's some incentive and employee just like reward the employees, but what other considerations go into a successful tender? Yeah, so the tenders and just the broader market we're talking about has grown dramatically over the years. And one of the interesting things is like a lot of these companies have made the transition to being cashflow positive in the private markets, which means that more shares are actually bought in secondary than primary through things like tenders, right, over the lifecycle of the business.

1:00:55You know, Databricks just did that massive round, right, to convert and pay the tax bill for a lot of the RSUs. SpaceX has raised$10 billion in primary over its, you know, 23 years of being around the company. They've been running, you know, two tenders annually that, you know, total like more than a billion and a half dollars a year for a long time. And so, you know, I think a lot companies are falling in SpaceX's footsteps particularly and building liquidity programs like theirs. Stripe, you mentioned Databricks, Splide Intuition, OpenAI, Anduril, a lot of them. What hasn't changed is that it matters who your investors are.

1:01:30So great investors, they may not make your business, but terrible investors will definitely ruin it. This is why the best companies want to control their cap table as always. And work with investors like us on implementing the liquidity strategy as they scale and more companies as they stay private longer as they've scaled, even as they hit cash flow positive, tenders have been a way for them to offer liquidity and kind of postpone going public. And it's a way to align incentives. It's a way for recruiting and retention, like you mentioned, right? If you're recruiting against publicly traded companies, if you're recruiting, you know, software engineers against, you know, Google and Meta, or you're recruiting researchers from NVIDIA or Google, you want to be able to offer not just a compelling package and upside, but being able to offer liquidity also helps bake into folks' kind of comp decisions.

1:02:18You have people that have, you know, structurally have to run these tenders based on their RSUs, like, you know, is on the single-trick RSUs. And so they structurally have to run them for their employees' tax bills. There's a bunch of reasons. You know, some people also use them to mark the business up, right? If you're not raising primary because you're cash flow positive for years, then liquidity checks a bunch of other boxes, but also allows you to continually show progress in the stock of the business. So I just think, And as the capital markets have grown, as these companies have grown, the secondary market has obviously grown with it.

1:02:48And I think a lot of the best companies have had the privilege of working with their investors, working with folks like us, people they want on their cap table and to grow on their cap table to run these programs and control and manage liquidity in a way that's beneficial for the company. Have you guys looked at any businesses that are basically building actual software to manage these liquidity programs? And did you guys ever think about incubating something there? Or is every company unique enough that it should just be done by the investors and the company's counsel? And it's just all bespoke.

1:03:22Yeah, I mean, there's like two versions of that. There's the software to run these programs, which exists, right? Carta has great software, right, for running this. And so I think, you know, that's just back to like broader cap table software management trend, which is awesome. But that's like more of the execution side. The other side is more of creating a market, right? And then using software to facilitate more liquidity and grow liquidity. And that is basically another version of the same thing we talked about earlier, right? Which is like the best companies want to control their cap table.

1:03:53The best companies have unlimited demand, right? And so in that essence, you don't need a broader market to have random buyers and sellers to do price discovery, right? And so I think the best companies generally like to run their own processes and work with their major shareholders. And a lot of times, which includes us and a lot of these companies as well. on kind of running these processes, very similar to how a primary process would run, just a different type of transaction and goal. Yeah, to me, it feels like you guys are in the financial services business in many ways when you're creating these sort of programs and you're an investor as well.

1:04:26And there's constantly people that see the opportunity, they see how big it is, they try to attack it with sort of software and marketplaces. And then time and time again, I feel like we see them sort of flop. And you saw this with Carta, basically kind of apparently giving up on their entire secondary brokerage business at some point um but but again uh people in venture always see a problem and an opportunity and want to like throw software at it and sometimes it's basically you know companies like andrel saying yeah we want to work with 137 ventures because they've done an exceptional job you know with with their relationship with spacex and you know we want that kind of partner as well and that just looks more like traditional financial services versus, you know, a venture business.

1:05:11Do you give any attention to every once a month, these sort of lists pops up around heat around different companies. And sometimes I see this list. Well, they're doing your job for you because you see a list on Twitter. You can just go hit the company up, right? Like, you know, you can just, you know, Usually you see 10 companies and you're like, all those make sense. Except for that one. So do you give any weight to these lists? Where do they actually come from? Because it doesn't seem like it's put out by 137 Ventures, which I would trust. To me, it could be a single broker who's just basically pumping their own bags.

1:05:52You guys nailed it. I mean, look, it depends where these lists come from. A lot of them are noise. They're not signal, you know, transactions. And a lot of those transactions are uninformed buyers and uninformed sellers. Yeah. As an institutional firm, we don't pay attention to them. And the best companies don't either. I, you know, it would be amazing if the job was so simple as to look at a list and press a button and buy. But unfortunately, there's a lot more to investing than that. So, but yeah, I think you'll see them either like aggregating a bunch of transactions from a platform level, but still a brokerage business, or you'll kind of have brokers who are, you know, sort of trying to create a market and advertise what they may or may not have access to.

1:06:33So yeah, that is in that segment of the market that I think the best companies don't particularly like and that you don't want to be in as an investor on the secondary side that we talked about earlier. Yeah. Can you talk a little bit about like how do secondary shares work their way into the broker system and how transfer restrictions work a little bit and how those have evolved over time? Yeah. Yeah. So on the first part, I mean, it's a broad range, right? I mean, you have employees that may not be under transfer restrictions. You'll have a lot of employees that may do transactions on a forward basis.

1:07:08So they're actually violating transfer restrictions, but it's a different type of construct. You have a lot of this too are just SPVs, right? So as investors, a lot of institutional firms will do co-investment vehicles with their LPs, and then those LPs will want liquidity. And so, you know, you in essence have liquidity into the SPV, which then allows you access to the underlying company. So there's just various forms of supply as companies grow, right? There is a lot of avenues where there just is supply. And some of it is legitimate, some of it's not, but you know, it definitely is there's a lot of legitimate supply for sure, right?

1:07:43From employees or SPVs, et cetera. The transfer restriction side actually hits on like this whole dynamic, right? And this is, this actually all goes back to the Facebook days. So in the 90s and early 2000s, companies only had a right of first refusal, and that was sufficient to discourage random buyers. Facebook was obviously a popular consumer business and the first to go to tens of billions of dollars enterprise value in the private markets. And there wasn't as much money in venture back then. So the company and the company lost control of its cap table because the volume of shares that traded was well beyond what the company or existing investors could purchase.

1:08:20And so you basically just had a lot of outsiders being able to buy, right? Because there's tons of demand. The existing investors weren't able to just use a rofer as a way to buy it and control it. And so once other venture companies saw this, they implemented basically blanket transfer restrictions. And that has been the default ever since. And so you have to understand that the entire benefit of being private is that companies can choose who they give information to and allow the cap table. No founder wants an activist investor. And if you pull your cap table, it's kind of no longer your choice.

1:08:49And so transfer restrictions have sort of been the default. Even in the case of Facebook, like Yahoo could have potentially built a position or Google built a position in the secondary market and then had rights at some point, which would be potentially disastrous. Didn't happen, but you know, that's the risk. So if there are no transfer restrictions, does that mean like an early employee could just meet a random VC at the Rosewood and say, hell yeah, I have, I'm sitting on$2 million of stock in this company. You want to take it off my hands and they can just do that over a handshake and some contracts?

1:09:20Or does it eventually need to bubble up to like the company? How does the company actually go for their shareholders? There's still a rofer, right? So yeah. And like I said before with the right of first reviews, it was enough to discourage this. But then with Facebook, the demand overwhelmed, the ability for the investors to actually execute, exercise that right, right? From a capital perspective. And so the rofer is discouraging because if I'm trying to build a position in a company through the secondary markets, there's no transfer restrictions. I know that I go to an employee. I say, Hey, you have$2 million.

1:09:50I'm going to keep running into this problem where we get a handshake deal. I'm going to buy 2 million and then the company buys it. And then I go to the next employee, right? And it's just a waste of my time. That's the main structure of the company or the other investors. Correct. Exactly. Talk about the companies you invest Justin, or many of them you described as having effectively unlimited demand for the equity. And right now we see venture funds that have ballooned and they have more capital than ever to deploy. It used to be these companies would get to the point where the VCs would be like, I remain giga long your company.

1:10:29I'm fully tapped. I just got to let it ride. Now it's less the case. sequoia funds three with like 30 mil have you seen do do elbows get sharper in some of these later rounds where i imagine from an aum standpoint like you guys have a ton of aum but you're coming to the table with people that might have 10 times as much aum and these capital bases where they can hit up a sovereign and be like hey we're doing an spv into this one do you want do you want to come in five billion yeah yeah so what what's the the competitive dynamic in the in these sort of later stage. Good question. I'd say, to your point, 100%, as these companies really scale and demand obviously follows suit with the performance of the fundamentals of the business and how they've executed on the story, you do see, obviously, a ton of...

1:11:21I mean, if SpaceX does a tender and they're 10x oversubscribe, that is billions and billions of dollars of demand that is unmet. And the investors, to your point, the venture ecosystem has grown. So there's a ton more dry powder in the market as well. But also, I think the size of these tenders and primary rounds does scale a bit, definitely on the tender side. So I do think as a company grows, its secondary market does grow and the liquidity programs grow in size. So that helps meet some of the demand. But you 100 % run into that. Like, look, at I think a certain stage it works, but there's a certain stage where like there's more demand for, you know, SpaceX or Android than there is supply.

1:12:03And that just is the function of it. And I think, you know, that's where relationships really matter. But even then, right, there's still a limit. Right. So I would say like I think relationships are end up being the biggest driver there for your ability to still not just obviously an allocation, but also try to continue to size up the position and invest more. and you know I think being around being a major shareholder being around for a long time and having very close relationships which is what we focus on gives you a likability it's a likability allocation and venture is like often comes down to likability it's like does the ceo and the management team like you if so cool we're going to give you preference what's that quote it's like you know you might get your pro rata otherwise good being an spd promoter is more like being a club promoter than being like a VC or something like that.

1:12:50I have a more like... Venture is unique because it's a unique asset class given how important access is. And access and that dynamic there leads to like... You could end up getting access to an incredible company and maybe even still be a schmuck to your point. um however doing that consistently and over a long time frame uh i think is a different story um yeah yeah totally uh how do you advise founders that uh are kind of reaching the territory where you guys are starting to invest i'm going to pull out a number let's say they're close to nine figures of error are they're a real business now it's working they're raising a bigger round that's some mix of uh you know liquidity for the team as well as you know uh some some growth capital do and they're worried about kind of like signaling risk around selling secondary right in the public markets you see this it's like okay this cfo is like selling a huge amount of their position that's obviously bad same thing on the founder side if the founders are selling huge amounts of uh of secondary it can be a bear signal uh and we saw the worst of this in 2021 and 2022 where founders would be selling like 50 million dollars like pre-product market fit uh and that wasn't common but how do you advise founders as they start to get opportunities to get liquidity and they're sort of worried around well i'd like to be able to like buy a house and put my kids through college but uh without stressing about it but i don't want to send the wrong message yeah i mean i i think you hit on you know the reality of obviously they're they're the obvious extremes, right, which is, you know, the founder selling 90 percent of his position while still operating the business.

1:14:39That's obviously going to going to raise eyebrows and people are going to protect that. And the founder, you know, sells ten dollars. Also, people probably aren't going to bat an eye. Right. So what number in between is the magic number, depending on stage? And, you know, look, I think, one, it's usually driven by life needs. Right. And so that de facto backs into a dollar number that makes sense. Right. And so I think many times the conversation is around de-risking about a life need. Someone just had a kid. They're starting a family. They want to buy a house. Right. And so I would say, like, you know, you're also investing in founders that you trust and are rational and reasonable.

1:15:16And usually these conversations are fairly easy from that perspective. I don't think there's like a particular dollar amount. I think one of the things to think about, whether you're a founder or on the investor side, is more so you want to think about the two dynamics around percentage of holdings and then total dollar size. And those are interesting. In some sense, if you sold$5 million, but it's half of your holdings,$5 million at a certain stage of business is not a lot, but something 50 % of your position while still operating may signal something. And it works both ways. You may be able to sell a hundred million dollars, which is a lot, but it could be, you know, 5 % of your position, right?

1:15:53Which generally people would not view as a lot. And that's the conversation. So I think it's a bit of like, um, it depends on the, the, the circumstances and the context, but for the most part, founders are pretty rational and reasonable. And you got to remember most founders are the most bullish in their company, even more so than the investors. So the desire to sell is generally pretty tapered and usually driven by life needs. Yeah. Makes sense. Well, thanks for stopping by. Great to have you on. Great conversation. can we see the rocket again can we see show us the rocket one last time let's see the rocket and then we'll get out of the next one oh that's a beautiful engine uh let's hear it for the rocket folks if you uh if you end up with a spare rocket we'll throw one yeah send it over if you got an extra laying around uh i need at least three more appearances on the pod okay deal deal i can talk to the rest of my partners and maybe one two seven ventures we'll send you a rocket we'll see fantastic you heard it here first folks it's great having you have a great rest of your day talk to you guys talk to you soon we're going back to back folks we got back to back seven more guests coming into the temple i think six uh we got darshan from uh beyond he just launched the big screen to the vr headset we discussed this on monday i believe maybe maybe maybe friday actually yeah and it's a very cool vr headset i think we got him in the temple of technology Welcome to the show.

1:17:11How are you doing? There he is. Good. Thanks for having me. And congratulations. Can you give us the breakdown? What did you launch? How did it go? Yep. So we launched last Thursday. This is our second generation product, Big Screen Beyond 2. We launched our first gen about two years ago. This one addresses a lot of the things that people really wanted out of the next gen one. So for people who probably know this old thing, this is the Apple Vision Pro. Yep. I had one for exactly two weeks. Yeah. I've got one on my desk. That's where it's nice. Well, you're in the industry, so I expect that you wouldn't return yours.

1:17:42It's a beautiful piece of art. It is incredible technology. Yes. And I've got some spicy takes. But I don't think anyone wants to wear a brick on their face. It's just unless you're skiing or something, maybe. But even then, people don't want to wear a brick on their face. So we've been working on this company for about 10 years. We raised some capital from Andreessen and True. and we set out to build the world's smallest VR headset. So we think that VR is much more like wearables, much more fashion-centric actually. So it needs to be super comfortable. We're chasing after enthusiasts, not mainstream mass market.

1:18:19I think we're playing a 30-year game. People are like kind of in it for, let's start a thing, build a whole thing, like flip it in two years, blah, blah, blah. Like we're actually playing a long-term game here. So we built Big Screen Beyond 2. It is the world's smallest VR headset. This way is... So small. two-thirds of your iPhone. An iPhone is heavy compared to this. And it looks pretty freaking cool. I think it looks great, yeah. Congrats on the launch. Yeah, when you think about playing 30-year games, how do you think about just capital efficiency? There's the meme that hardware is really expensive and all these companies.

1:18:53I imagine you run, if you're playing those sort of long-term games, you're like, well, we need to be in business for 30 years. We need to be able to have big moments where we sell a lot of products and then maybe we're going through dark times. I'm sure you've been through both already, but how do you think about durability of the business? Given that you're selling hardware, which will just end up, you're going to have fluctuations in demand. A couple of things. I'm pretty sure, I don't know if they would want me to say this publicly, but I'm pretty sure we're the single most capital efficient company in our investors' portfolios.

1:19:23For capital efficiency, folks. Thank you. Hit the gong for that. We love that. It's not typical, but we love to see it. We love some capital efficiency on this show. We have raised 17 million from Andreessen and True. And at some point, I think we had like 10 years of runway. And now, you know, for a couple of years, we've been cash flow positive. We could be, you know, we could be profitable any minute that we want. But we put all of our revenue into R &D and the team. And that's it. Like zero dollars in acquisition of customers. It's all organic. Hardware is a lot cheaper than people think. I think Meta is wildly inefficient.

1:19:55They're spending, you know, tens of billions a year to try to accelerate a market. it. They're also playing a different game. They're trying to go they need to get a billion users. I don't care. We can make a massive, awesome contribution to the world by focusing on people who really, really need what we do. And we can do it efficiently. Like the number of people at meta that are doing stuff. They just throw everything at the wall and at no cost, right? It doesn't matter. And frankly, don't tell the shareholders that it does have a cost. I think the cost is 20 billion. But respect to Zuck. I love a guy who's chasing his dream.

1:20:33Yeah. So how many? Yeah. Sorry. Let's let him continue. Go for it. Yeah. For us, we're playing a different game because we can stay focused on like real use cases and make a real business out of it. And like just on first day of our sales, we did 10 times more than we did for our first gen. Wow. In a couple of weeks, we will have done more sales than we did in 2023 or 2024. That's amazing. Congrats. So how many companies that were high flying, amazing teams came out and raised more than you? You started in 2014. There must have been probably 20 companies that you're a pretty viable competitor, flashy, raising a lot of money.

1:21:12But then they spend it all in two years. Has that happened a bunch of times at this point? There's a bunch of times, like waves of capital and then also hype cycles, right? There was like AR wave or there's the NFT crypto wave or there's this or that. There's so many waves every year or two. We've actually stayed extremely focused. We're focused on building an excellent VR headset for consumers, particularly like PC gamers and enthusiasts, as well as the past year, like the businesses that have reached out that are using our stuff like NASA is one of our customers. We have a bunch of customers in aerospace and aviation, education, retail.

1:21:47there's like a nuclear energy department whose website looks like they're from the 90s and they've been buying our stuff we have no idea what they're doing with it but secret operations uh yeah i want to ask about so i i'm kind of like a vr enthusiast prosumer level maybe i've had a number of headsets i've built custom pcs with nvidia graphics cards to wire them up had the first oculus and then like the next seven of them or something they've always kind of wound up collecting dust. Can you walk me through what would you recommend just for the first like magical big screen beyond experience? What's like the basic hardware I should get?

1:22:23Should I get a PC? Should I, you know, what's the ecosystem look like to knock it out of the park and like what game or what experience am I playing? It really depends on what floats your boat. So I'd suggest like get like a good PC. If you're going to build one, I've built my own computers. That's all I do. Love it. Great. Do that. If that floats your boat. Otherwise like buy like a good nzxt pc okay like a rtx 4080 or 49 get whatever you can afford uh buy the beyond 2 and then it really depends on what you like like racing sims are in this just the feeling of like going down like the nordschleife in a car like you could just you cannot get an experience like this in real world because you will probably kill yourself we're getting so we're getting a new studio yeah we'll consult with you and uh yeah we're gonna get the full rig yeah it'll be flight sim is another one like i've literally flown a 737 out of lax at night no i think so here's a challenge for you yeah make a game that's basically i'm sure somebody's already made this game but you know how every guy thinks they can land at 737 if they were asked to right like that's the challenge it's like a big screen 737 challenge and it's like you get dropped into a plane engine down and you got to land it this is one of the craziest stories uh the first time I ever went skeet shooting, like shotgun shooting.

1:23:40I'd never shot a gun before in my life, and we were competing, and I beat everyone. And everyone was like, is this just beginner's luck? And I think the reason was that I'd been playing VR shooting games for like a year straight. I've been playing Robo Recall on the Oculus, and I was like, this is second nature to me. So I really think the VR training thing is real. One of the use cases that I really enjoyed with the Apple Vision Pro while I did have it was just sitting there and watching movies in bed at night. it could uh how close are we to having just like a puck like i'm almost thinking like a little mac mini that i just link under my bed that i can just kind of plug this into because i know it's not fully standalone but the benefit is that it's not going to be heavy on my face um is is there is there a way that i can kind of get that level of experience with the big screen beyond too yeah so the company's named big screen for a reason this we actually started building hardware because we We wanted, we made software for a long time and we hit limitations.

1:24:35Our software is still there on the MetaQuest and stuff like that. We've got like, I don't know, six, seven million users in VR. We actually have a very sizable software platform, but the hardware just was such a big limiting factor for the past five years. We couldn't achieve the vision we wanted to under the platform that was given to us. We had to go build it ourselves. And it turns out other people wanted it too for all these other use cases in gaming or in enterprise use cases as well. So we want to build hardware that you can actually use for movie watching. But the problem is, like, I could go right now, turn on my TV and watch Netflix in 4K HDR on OLED TV in 10 seconds.

1:25:12It's pretty good. VR needs to get to that level. And I'd say we're halfway there. We're getting closer. And we had to build incredible hardware for it. We're building the software for it. And at some point, our path to going mainstream is basically... Meta's path has been, like,$300 headset. There's something like 20 million of them. it's doing really great with kids uh our path i don't think it's actually it's not about price it's about price to utility so we want to deliver you like a two or three thousand dollar incredible home movie theater system i love it and yeah you can play games with it you can do all this other stuff with it too but it's not about price it's it's really apple vision pro is three thousand dollars but i'm not going to wear this for yeah actually the battery life limitations the weight the ergonomics it's not right it's not the right factor what is apple doing with vr because i've posted a few times i was like apple's like they're sort of giving up on it like you can tell they don't have real conviction they're just like they're in this highly commercial phase where they're just going to extract as much value out of the existing technology that they have and and that's you know can be good for business but i posted a couple times and people get angry they're not quitting vr they're not it's blah blah but what are they actually doing in in your view and are you the next CEO of Apple?

1:26:30I think Apple, I'm actually surprised that Vision Pro came out. They've been doing the work for a long time, but I wouldn't have put it out, not this way. I mean, it's setting the wrong expectations, creating weird hype cycle. This is not the next iPhone, but I think Apple is patient and is going to play a 10, 20 year game as well. They don't need this to become an overnight success. It's fine. Who cares what the markets say? Like they've got the cash for it. They can, they can do it. And they're also doing it in a relatively cash efficient way compared to meta. So they're playing a long-term game.

1:27:01I think they'll stick with it. I think it's in the hands of developers, but I think the problem is there isn't really anyone saying no, in my opinion, I don't know how Apple actually runs anything. But in my opinion, people aren't saying no enough. Like, so on that note, how do you, how do you think about focus generally at big screen? Right. I'm sure people are saying, Hey, build this for factories, build this for the military, build it, you know, and I'm sure you've had to, in order to be capital efficient and great, great, great products, you've had to say no a bunch. Do you have ambitions outside of entertainment in the long run or are you?

1:27:39Absolutely. The nice thing about what we do is that we're laser focused on a set of problems that happens to cater to the needs of a bunch of people. So the enterprises that are coming to us, they're using VR for real work for many hours a day versus the cycle. They all have Apple Vision Pro and Quest and all. They can afford all the devices. They've tried them. But you'll use it for an hour. You achieve your thing. And you got to go charge it for an hour. That doesn't work for most use cases. Think of this as Apple and Meta are trying to build the next smartphone. Meanwhile, we're trying to build the next workstation, the next TV.

1:28:14Apple actually canceled their workstation-focused VR thing. I want to ask one more question. On the Apple Vision Pro, can you give me your pros and cons? What did they get right? I feel like the external battery and puck was really controversial, but some people say that's really great. What's your take on Apple Vision Pro? I think they established that this industry is really not going anywhere. It's not going to go away. This is going to be here. Spatial computing is going to be a thing. It might take a long time, but it's going to happen. Apple and Meta are at it. They're going to go push it.

1:28:48That's the best thing that they've done here is they've made the world really understand what is VR or spatial computing and it's going to happen. What they're getting wrong is comfort and ergonomics matters a lot more. People are trying to build the next iPhone. But again, no one wants to wear an iPhone on their face either. There's literally a MacBook Pro inside of this thing. I don't want to wear a MacBook Pro. Yeah, makes sense. Yeah, that makes sense. Last question. broad applications of spatial computing in the military andrew was in the news with winning the i-vas program is the technology ready is it just about getting the product right and again i imagine that's sort of a 10 20 year kind of vision as well but uh it's not where you guys are building to my knowledge but uh yeah what's your take on that was it microsoft just had a good shot but didn't have the sort of leadership to deliver on it?

1:29:43Or was the technology just truly never ready for what they were being asked to do? I think that came out of an older generation, the like 2016 era hype cycle, where a lot of products were coming out that were telling a story that they really couldn't meet. So HoloLens, Magically, etc. were touting this vision of like, we're going to be able to do all these things. And what really matters in a nascent emerging technology is yeah but what can you do with it today like be honest that when you come out of the gate what is this going to be amazing at right now like so for us racing simulators gaming entertainment like really great things that people can do right now today with this and we're honest about that too many companies back in that first generation hype cycle yeah like they were putting out a product that the military could not it didn't work at all and there's billions of dollars for that.

1:30:33So now you're having people come out like Andrew that are putting out devices that should be able to actually deliver with the promise of current generation technology. What can you actually do with it? That's great. Well, thanks so much for coming on. We got to have you back to talk about VR every time there's more. Yeah, you haven't opted in, but you're our official VR correspondent. There's so much to talk about here. It's such a fascinating technology. I think people have kind of like written it off from time to time, but I'm continuing to be fascinated by it. There's so many cool developments.

1:31:01I'm really happy for you and the team too. I'm sure the last week has been massively vindicating and you guys deserve it. 11 years in, here's to the next 11. And look forward to the next conversation. An overnight success, really. Yeah. Have a good one. Later. Well, coming up next, we got Alex Conrad. But we got some breaking news. Ramp has partnered with FP Jorn. Did you see this? they're having a padel tournament in miami and the partners are ramp and fp jorn you love to see it folks love to see it fp jorn of course maker of fine watches owned by uh owned by uh none other than mark zuckerberg has some fp jorns francois paul jorn one of the greatest watchmakers in history still alive still cooking and he's using ramp baby he's on i yeah i don't know if this was supposed to be breaking news but it is now okay it's pretty awesome pretty awesome i mean if you text us i'm gonna talk about it it's amazing it's a public website yeah i think i mean maybe this is maybe i think this is a public website yeah i think i i think it's a public website extremely taste we will share this i'm very excited about this if you like padell uh we will we'll share the link at some point you can go our sweet fantastic anyway uh we got alex conrad coming into the temple of technology.

1:32:20Welcome to the show. Congratulations. Big day. Hit the gong for Upstarts. Let us know what you're announcing, what you're doing. Break it down. Yeah, thank you guys. I'm so excited to announce my new startup today called Upstarts Media. Upstarts Media is a new tech media publication focused on the startup ecosystem. Fantastic. What's the angle? What are you doing differently? What are you leveraging and will there be a list of the best and more importantly, the worst venture capitalists dropping soon. I know that I have a customer in you for that for sure. The Icarus list. Yeah, I'll think about that.

1:32:57I actually did 25 audience calls ahead of time and I should have asked that specific question, should I launch an anti-Midas list? But yeah, for your audience who don't know me, I spent 12 years at Forbes covering venture capital and startups. I really lived in that world, wrote a bunch of cover stories about folks like Melanie Perkins at Canva, the Collison Brothers at Stripe. I wrote one about a soft rap report at Wiz, which has been in the news a lot. I really enjoyed writing about startups and the VCs who fund them. And I felt like we were in a moment where so much traditional tech media coverage is focused on big tech politics.

1:33:32We have tech people in the White House, big policy debates, not so much on sort of the startups that I really love writing about. I just heard from so many people that it was just part to kind of get those founder journeys, you know, startup storytelling out there right now. And so I'm hoping to do my small part to just tell those stories. How do you think about the different products that are offered in the media ecosystem? I mean, most people just think like it's a news article, but once you dive in, you realize like there's investigative journalism, there's breaking news, there's profiles, there's op-eds, there's editorial, there's all this different stuff.

1:34:07How do you think about the landscape and what interests you the most? Yeah, well, first off, you know, these tech bros showed up and they just completely created a seismic event for us in media. No, but seriously, like jokes aside, you know, I think you guys and a lot of these new brands that have been the most interesting in tech journalism and media right now have kind of come from these adjacent spaces. They haven't been traditional journalists. We have seen, though, some people go independent and try to kind of get more direct. You know, we keep hearing go direct, you know, from certain founders and PR folks.

1:34:40And I think that's great for certain people. But my hope is that there's still room for curated storytelling from journalists like me, who can help especially those founders who maybe don't have the platform to go direct, and also can just maybe connect the dots in ways that you wouldn't get from some of these awesome podcasts and shows like your own. I mean, I really do agree with you. We were talking about to Lulu about this yesterday, just the idea of like, yes, you should go direct and post your own news, but then you should also talk to new media like you and us. And then you should also talk to the Wall Street Journal if they come calling.

1:35:12And it's really like an ensemble strategy to build this cinematic universe around you and what you're doing, if it's important. Yeah, how do you think about, funny timing. So we talked about this last week about TechCrunch selling. It was unclear what they were gonna do. I think TechCrunch had sort of created this. The thing they did well was like make people's parents proud, right? It was like you wanted to get into TechCrunch. It was just sort of like this moment in every founder's journey. You go there to announce a round or for a product launch or whatever. And they sell to private equity, which people were like, oh, great.

1:35:50Like private equity is just going to come in. And, you know, I don't know. Nobody knew what they were going to do. And then the first TechCrunch headline I see is this like hit piece, you know, drive by hit piece on 11X. which whether or not it's fair, it's like TechCrunch is in a very weird position around. They're, I guess, trying to do investigative journalism, but then they still want to be the place that maybe you launch your startup. Are you trying to pick a lane in saying, like, we are pro-founder, we are pro-tech, we know this is hard, but we want to tell your story in an authentic way that makes, like, are you looking to really develop trust with these founders and cover them across their entire career?

1:36:29is you know what is that like i'm trying to kind of hone in on on your specific angle because i think the temptation is you know uh somebody starts out writing tech positive and then eventually they get some crazy scoop and they're like oh this is gonna get so many this is gonna get so many subscribers controversy yeah i'm just gonna publish this funds returns you know but i'm yeah i hear you about it i i have like three different responses for that but i can try to keep them short. It's really an important debate, I think. First, I would say our ideology is that Upstarts was founded on the belief that startups are at their best when they punch above their weight, challenge the status quo, try to improve the world in some way.

1:37:13And I think at that core, I believe that technology is great for the planet, great for our daily lives. And I want to write about that. I think at the same time, I am going to be a journalist. I am going to be independent, so I'm not a cheerleader. And just because a lot of my Midas VC pals might be subscribing today doesn't mean I'm going to suddenly write about their portfolio company or something like that. I want to keep a really impartial and fair view. But that's really what I tried to build in the last 15 years writing about startups was that sense of trust that you can expect me to be fair, to have sort of the good of the ecosystem at heart.

1:37:47So if I do something that doesn't feel super comfortable, I'd say that's actually a good thing because you can get that from an amazing VC podcast, or you can get a beautiful marketing video. I might ask questions that push you a little bit, but I am in the ecosystem. I do consider myself a founder of a startup here. And I have that empathy that I'm going to be only punching up really carefully. I'm not going to be punching down. You know, I never want to get out of bed and be like, what startup am I messing with today? It's no Gawker 2.0, but I want to talk about like the instantiation of the work that you do.

1:38:20Obviously you're a writer first and foremost, right? and most people experience your work through Forbes.com essentially. But have you thought about where that lives? Are you targeting the email inbox? Will there be a printed version? I'd love a coffee table book of the Conrad list maybe this year. I think that would sell really well. I think every single VC firm would probably pay$1 ,000 for the Conrad printed coffee table book. Sell a lot of those. Are we going to get videos, podcasts? What are you thinking? Yeah. Yeah, so it's a little crazy because I am bootstrapping this business at first to kind of control my outcomes and test the product market fit.

1:38:58But I kind of want to do everything you said. I mean, maybe not the coffee table book just yet. That could be a year two goal. But I'm going to be launching a live video series of monthly interviews, very different from what you guys do, but just a quick, fun interview with the CEO next week. And I'm doing that like my newsletter over Substack, who have been a great partner. So I'm working closely with them and going to be publishing twice a week. I also got a shout out, you know, and this might be controversial on this show, but I am going to be working with partners to make sure that one edition of my newsletter is free each week.

1:39:30I want to be proving this can be a sustainable business, but also inclusive to folks who maybe are early career students, you know, founders who are cutting their burn and they want to get high quality news, but they don't want to pay yet. And so I actually signed a launch partner in Brex. Oh, okay. Brex is my launch partner. But I'm always happy to work with others down the road. But yeah, I mean, that's basically the way I'm thinking about this is multiple streams, a newsletter. I'd love to do a podcast eventually, but I'm going to be building in public. I'm going to be screwing up a lot. I think that'll be authentic with this audience.

1:40:03You guys will see that. Awesome. Yeah, that's great. What's the future of the Forbes brand? It's been an interesting spot. I'm saying this, you're not saying or confirming this, but I know they've been like on the market trying to sell themselves for a long time. They sold off a bunch of random assets. Austin Russell was circling. Forbes book publishing is not really tied to the parent company anymore. You know, it's like very unclear. Like it was an iconic media property. You tried to keep it alive and, you know, you... And certainly more brand cachet than TechCrunch, I think. Like the Forbes brand still has a lot of...

1:40:40Yeah, but it's been diluted over time. And part of, you know, if you had stayed and said, I'm going to recommit the next decade and sort of bring it back. I'm sure there's a variety of factors that that didn't allow for that. But what happens with Forbes? I know you probably can't. Maybe you can give your most sort of positive perspective on it. Upstarts is acquiring Forbes in 2026. Scoop! Scoop! But to answer Jordi a little more seriously, you know, I started covering startups in 2010. You know, TechCrunch was a giant. VentureBeat was a giant. You know, Forbes, the website was still very siloed.

1:41:19So it was Fortune. It's like the media has changed a ton in the past decade plus. I think like people forget that the Midas list was actually started in 2000. So it way predated me. It died off too. And it will outlive us all, whether VCs like that or not, you know? Yeah. Yeah, that's great. That makes sense. uh how what what do you think the uh what's the future of substack they they went through this kind of you know period of massive hype and then there was a period where every media platform was attacking them and then it seems like they've come out of it and now people are deciding to to go on and build real businesses from day one on the platform uh what what's your take on on um Um, are, are they having real network effects?

1:42:03Like, do you think they're, they're sort of existing audiences there are going to help you accelerate your growth faster? Maybe kind of break down the decision to start there versus working, you know, ground up on, on a beehive or one of these other products. You know, I think, um, there it's good if there are multiple options out there and that they get better and better. And I think companies like beehive are pushing sub stack to update their, their own technology, you know, from a technical component, I was really impressed with beehive. Ultimately, Substack was where a lot of my peers, a lot of the folks I think are startup curious are today.

1:42:36It is, I think, an effective social network. And so when I was thinking about who I wanted to partner with, that was really important for me. You know, other journalists, other writers who are in the ecosystem who aren't journalists, I hope that we can collaborate. They can, you know, send their audiences back and forth. And I think, you know, what they're doing in video notes, they're trying to kind of adapt and have new ways to reach audiences. And that's going to be a huge priority for me. Um, I, I had a crazy idea. I pitched a, another writer. I want to get your take on, uh, the 30 under 30 list is, is, uh, it's controversial, but I think generally like there's a lot of people that want to be on it.

1:43:11They're excited. And then they get frustrated when they turn 31 or they're ineligible. Uh, my idea was, uh, every week for the full year, you post here are 20 cracked 20 year olds. And then the next week it's here are 21 really great 21 year olds. Here's the 22 year and you're just chronicling all the great people in tech. It's an opportunity to get on a list every single week. It's massive viral fuel. Do you like the idea? And can we expect it from your media empire in the near future? I promise everyone I would wait at least two quarters before I shipped a crazy list. So I got to add that to the product roadmap.

1:43:49But I do want to cover non-CEOs. I think there are a lot of cool people in startups who we don't ever hear from. Totally the operators, right? Yeah, makes a lot of sense. Well, I mean, thanks for stopping by. Congratulations on the launch. We'll definitely stay tuned. We'll have to have you back when you break a big story or do a wonderful thing. And it'll be my goal to have you guys on my show someday. Fantastic. We'll be happy to do it. We're down, but we will also be streaming our show at the same time. We'll have dual syndication. I love it. Well, thanks so much for stopping by. Good luck to you.

1:44:20Congrats again. Congrats again. Talk soon. We'll talk to you soon. See you guys. Thank you. Bye. Fantastic. Fantastic. Well, coming in next, we have Willem. This is your buddy. Yes. You want to give a little backstory on who this guy is? Yes. I mean, he should be in the waiting room any second. I will make sure. From terrain.com. Good domain. Fantastic domain. Fantastic domain. Fantastic domain. Single word. Nice little logo. It says, call your shot. Terrain is an early stage investment firm focused on software and technology. Not giving me a lot to work on there, but we'll hear it from him. He's here to break it down for us.

1:44:55Willem, are you there? What is Terrain? Welcome to the show. What's going on? How are you? Looking really great. Popping in with the art. What do you got behind you? Yeah, bring it down. This is actually a piece that my mother made. Oh, that's nice. So I'll put a plug out for her work. It's Catherine Van Lanker. Shout out to Catherine Van Lanker. She's a painter. She's been a painter my whole life. Fantastic. Can you break us down? What is Terrain? What are you working on? What are you announcing most recently? Yeah, absolutely. And thanks for having me here, guys. It's great to have you on. Great to see you both.

1:45:27So Terrain is an early stage investment firm that I started last year with Eric Stromberg. And we back founders who have specific and ambitious views of the future. We like to say these are people who call their shot. These are folks like Zach Dell and Justin Lopez at Base Power. Alex Mather at Eternal. Zach Abrams and Sean Yu at Bridge. And increasingly, we think that this is just going to be very important to build a meaningful and lasting company, whether you're attracting capital or building an audience or building a team that being able to clearly articulate your vision of the future is just going to be the things that separates the good from great.

1:46:13Yeah, definite optimism. I want to know about the whole call your shot, declare your free agency thing. It feels much earlier than, hey, show up on Sand Hill Road and raise a mango seed round in a weekend. Walk me through the different options that founders are facing these days. They can go do YC, especially if they have a good track record. They can even do EIR programs at Founders Fund, or that's what I did. I wound up doing this. But at VC Funds, they have EIR programs that are a little bit more flexible for folks. But where do you see slotting in? Because it sounds like you're thinking pretty early stage.

1:46:53Yes. So, you know, first and foremost, we're an investment firm. We invest from that really early stage, which I'll talk about shortly, through to seed and series A. So we're very kind of flexible in kind of where we enter and, you know, work with, you know, those companies that existed are, you know, raising mango seeds or series A is whatever you want to call it. This most recent program we launched is called Free Agency. And what that is, is a concentrated 90-day period before you have your idea to go through a focused exploration to uncover your idea. And this stems from the belief that it's kind of a missing thing in the market.

1:47:32It's something that I saw while I was at Thrive Capital, where we were partnering with people who had an edge or an interest area in a certain technology or a background, but we're not yet convicted behind what that is. And, you know, the venture industrial complex tries to, you know, give you capital and, you know, quite frankly, perhaps before you're ready and make those commitments and those decisions before you're ready. And so with free agency, what we're doing is we're unbundling that from selecting your idea and taking capital. So there's no strings attached. There's no cohorts. There's no demo day.

1:48:07There's no kind of deal that you have to take. It is really this period of open exploration. And our hope is that it results in more thoughtful and deeply convicted ideas from the founders we get to work with. And on the other side of that, if it makes sense to partner with Terrain, fantastic. We will be there and waiting. But we believe that that is just something that is really needed. And we're on the last day of applications today. And quite frankly, I've been really surprised and elated by how many people this seems to resonate with. Do you think most people can figure out if an idea is good or bad without spending money?

1:48:42Because the typical accelerators like come in, we're going to give you 200 to 500 grand, maybe a little bit more. And then you're just going to start spending money to like figure out if the sort of high level idea that you had is good. now i think a lot of really brilliant entrepreneurs do all the work to sort of like make that idea concrete sometimes for years prior without ever spending sort of explicit dollars but venture dollars are so available so as part of this program to basically say like all you need to do is invest time and energy into exploring your idea you actually don't need money but when the time comes to actually hit go we'll you know we'll be there you know other other funds in your network will be.

1:49:24So maybe talk about that because like you at Thrive Capital leading incubations, you guys incubated a lot of companies. I'm sure you also explored potentially thousands of ideas, right? And so maybe talk about kind of your process. And I imagine a lot of free agency is like built out of, and your sort of process internally is like, how do you evaluate ideas? How do you kind of build conviction without having to spend a lot of money? Yeah. So one good feature of today's ecosystem is that we actually have access to a lot of resources that maybe didn't exist in decades prior. Every person that participates in free agency gets access to over 350 grand in compute resources and service resources, that sort of thing.

1:50:11So there is some capital to deploy via technology. That is not dilutive or anything in that regard. You know, the process, and I'll kind of go back to kind of, you know, zooming out for a second. Each of these products, EIR, Accelerator, Incubator, free agency, they're products for founders, right? And so you have to meet the founder kind of with what they need in that moment. Free agency is not going to be for every single type of founder, and it doesn't need to be. You know, if you're a young person and you're looking to get access to network and, you know, enter entree into Silicon Valley, accelerators are phenomenal for you.

1:50:51But what we found with the people that we're engaging with is that we don't they don't want to be put onto that track. They don't want to be kind of put onto that timeline and make those decisions kind of too far up front. Instead, what they want is close partnership to dissect an idea, to dissect a market with the perspective of investors and with the perspective of someone who can be that thought partner through the journey. And you guys have both started companies. You know that feeling of being close to something but not quite there. It is not the myth that is often told on stage where you're struck by lightning one day or Almighty comes down and just drops the idea into your head.

1:51:32It is a process of iteration, of staring into the abyss at times. And we just think that there can be some structure placed on that and some shortcuts to strengthen the business model or strengthen their travel through the idea. It's what we saw time and time again at Thrive. And the reason to not attach capital to it is, one, both for that point of commitment and restriction. But the other is I think it makes you make decisions differently. I think that you either if you have that stipend and you're hanging out in the offices and you're drinking the spa water and the VC office every day, I think you have a different mentality about the burning platform and the company that you need to go and build.

1:52:14And so we think that, you know, actually creating a little bit of a pressure cooker during that time is really, really important. Yeah, I completely agree. I love spa water, too. I mean, a lot of great followers. One of the best benefits of YC is just like the competition of like seeing everyone around you, the pressure and having a deadline, it's great. I wanted to ask about like archetypes that you're seeing. Like there's so many different people that I could imagine going into this from the repeat founder who really wants to make sure that they call their next shot and they take a big swing in it.

1:52:45And they're ready to set up with a lot of capital when they're going versus the early stage employee at a growth stage company that wants to move on to something new. leverage something, but wants to fully transition out of the previous company versus like the high school college dropout. Uh, is, is, is there a pattern or are you just widely open to everything? It's been, it's been really open. So we've had hundreds of applicants already. Um, you know, these have been engineers and designers and companies like open AI and Databricks, SpaceX ramp, you know, like you name it. Um, we have a Gen Z creator who has millions of followers, and more research-focused people from DeepMind, and then some successful repeat founders, both in our network and entering from the application.

1:53:30And I think what it illustrates is that there isn't something really like this. And I feel you're supposed to keep these things secret for a while, but it really feels like we've hit on something to meet people in this moment at this stage. I think with this first batch, we're going to experiment and try to take on a real diversity of people while keeping it focused. But I imagine over time, we'll start to see a kind of a consistency form. But, you know, more than anything, I think these are people who are not starting something because someone else told them to. They're starting something because they believe that this is almost the last resort, right?

1:54:07It's like, I can't join a great company or I'm at a great company and I have this thing kind of burning in me to go build a company. Is talk, when you're calling your shot, you have a big sort of vision for the world. is talking to customers overrated. Like the YC approach is like, have a loose idea, iterate quickly, talk to a lot of customers and that clearly works. But at the same time, we've seen some other like sort of major power law businesses where they clearly just had like a vision for how they imagine the world. And yeah, you got to talk to customers along the way because you have to sell to them.

1:54:42But, you know. It's the Henry Ford thing. Like if I asked people, they would have said a faster horse. The ultimate, like, I didn't talk to customers, guys, Henry Ford. Yeah. Look, I think, you know, Henry Ford certainly talked to customers along the way, but I think that had the vision of what he wanted to create. And that's the case that we see with, you know, with people like, you know, Zach Dell at base. It's like he wants this idea of, you know, energy too cheap to meet it. Right. And that's where the starting point is. And let's work backwards from that, because if we can achieve that view, we know we can appeal to customers.

1:55:16Right. Or, you know, Zach, a lot of Zachs here, Zach at Bridge, you know, started that company not during a time when cryptocurrencies and stable coins were all the rage, right? It was built on internal conviction over many, many years. And I think that in the environment today where software has eaten the world and you should assume that if you're onto something interesting, there are two or three other competent, well-funded, you know, good people going after it as well. It has to be, you know, from that kind of internal conviction, not from, you know, I pulled 500 people and they told me that, you know, dogs want this type of, you know, X, right?

1:55:56There was an era where I think that worked and I think we're out of that era. Do you think founders get way too much validation of their ideas from investors? Because I've fallen into this trap before where people will invest in your company, you know, if really smart people will invest in your company, sometimes you can think, well, I must, this must be a good idea, you know, because people were willing to bet on it. When usually from the investor's point of view, there's tons of scenarios where investors are like, yeah, I'm sort of so-so on the idea, but this guy is just so great. So is that some kind of like, you know, I'm curious if like, you know, one of the, like, you should basically get validation in your idea by spending enough time with it, spending time talking with other intelligent people that aren't just incentivized to deploy capital, but actually want to help you find that, you know, help you get to the point where you can actually call your shot?

1:56:50Totally. Look, I think that maybe 15 or 20 years ago, when C2VC and early stage venture was more scarce, you could rely on that. Like, you know, you could say, well, you know, there's someone who's willing to stake capital on this. And thus, I've passed through some barrier. Now, that didn't mean that it was, you know, the next Google or Facebook, but there was some barrier that you passed through. I don't think that's the case. And I think that honestly, the best founders are not solving for capital at the beginning. There, you know, there's more options available for them than ever. There's bootstrapping, there's, you know, coming in with past success, there's friends you have around the table.

1:57:29And so what I think that means is that the moment you put up that flag and say, I want to start something and you're a talented individual with great experience, those offers start rolling in. And you have to have the internal fortitude and disposition to say, I need to make sure this is the right thing. Because that investor or that angel investor is going to place who knows how many bets. And you're going to place one during this period of time. You are an investor of your time. And that is one thing that you can do during this period. And you have to take that really seriously. So I think that it's much more about finding that for yourself because you can't outsource conviction and you can't outsource that type of diligence, especially when the incentives aren't necessarily fully aligned.

1:58:44I have a question. got to tune it out. And I think that if you're doing something right, then people will throw shade at you. And I think it's a great thing. It's still a great metaphor. Do you have a last question? Yeah, last question. I'm sure you get hit up by people all the time that are starting venture studios, incubators, et cetera. You ran incubations at Thrive. Now you're running a traditional venture fund. I'm sure you could do an incubation. But do you think that that model is best done opportunistically versus, you know, systematically? What's your takeaway from, you know, doing a bunch of these?

1:59:24Totally. The, you know, going back to that kind of idea of products and the product person, like you have to be building a product for a great audience. And I think that you need to be honest with yourself about what value you provide to a founder. And, you know, incubation is a really appealing tool, right? And I think it's like, hey, we can get more ownership and we can kind of, you know, I have all these great ideas and I can create it. But I see a lot of VCs piling into it, I think, for the wrong reasons and are going to make some mistakes. I think there's a real alchemy that it takes to get it right.

1:59:56And you have to know, just like as a founder, I think you have to know where your edge is. And when I was at Thrive, you know, my focus was on incubations and it was working really closely with founders right from the beginning. But there was always a humility in the fact that the founders are going to build this company, that we need to put the right environment together to help them find it. And also, there's a lane of where we can incubate and where we can't. These are areas that thrive. It was heavily regulated industries. There are really large markets that perhaps would take deep capital availability to succeed within.

2:00:29And it wasn't everything. And that, I think, was the beauty of being able to do both things, of do early stage investing and incubate, allows you to have that flexibility. And it's something that I believe we'll do really well at Terrain too. Awesome. Well, congratulations and good luck. Yeah, it's open for until the end of today. Maybe midnight. People can apply right now? Maybe midnight. Yeah, people can apply. It's been open for the last few months. And you've got a great domain too, Terrain.com. Terrain.com. Terrain.com slash free agency. It's a short application. Hope to see some people that cite TVPN as the source that they got it from.

2:01:02Thank you. Your next Powerwall winner is coming from our audience. There we go. There we go. Thanks, guys. We'll see you soon. Talk soon. We'll see you. Thanks so much. We got Jordan Schneider from China Talk coming on next. I'll let him give the pitch. But this is a fantastic podcast. China, China, China. It's one of those podcasts that's completely a portal to another world where on most shows, it shows up in your RSS feed, you probably haven't heard of the guest. So he's doing not only the great work of putting together the show, but also curating the guests, bringing you information that you would just never find otherwise.

2:01:41And he's been a really fascinating host. So I think he's here. Let's bring him on down. Jordan, how you doing? I'm doing amazing. It is a rare occasion where I get to get actually dressed up for something. So this is a real treat for me as my camera totally fucks up. It's okay. And we switch to the shittier one. Oftentimes an audio show. but that looks good too that's great there we go lovely jacket lovely jacket great to have you on the show uh can you give us a little bit of my wedding it's my only look nice nice uh can you give us a little high level on uh trying to talk what you're building just introduce yourself to the to the fans well yeah hello everyone out there i guess i just first want to start off by saying you know i grew up listening to sports radio and to have like a call-in show be revived on a vertical that I now spend way too much time of my life thinking about, I just think is great.

2:02:38So I'm rooting for you guys. I think you're on to something. What is China Talk? It is a podcast and newsletter about US, China and technology that I've been running for the past eight years now. And John did a really good introduction. I don't know. It's kind of weird. I'm not really trying to like break news or report on news it is just the best tagline i've given for myself is dwarkesh for the deep state i love it just like like the stuff that politicians and intelligence officials listen to on their drive to and from work where um i mean i guess now we're we're bringing cell phones into skiffs and and texting about targeting information so maybe my alf maybe my my window is gone um you need to get added to the chats yeah yeah they should have added you it would have been great i can neither confirm nor deny that i i told the missile to be um you know 500 meters to the right and uh be released right after the goat ended up uh you know doing its feeding well i mean speaking of the signal chat thing what what is your take on that and what has the has there been a reaction in china or amongst your sources and friends and people you text with it's just fucking embarrassing it's amateur hour it's this is the d team and i think this is like the the best like everyone knows that these are not all the sharpest tools in the shed and i think there are different levels of competency that you see across the cabinet level of this administration and the problem is is like when you look at the discourse of actually the quotes and the arguments that were they were going back and forth to each other like honestly i feel like my high school model un team might have been able to do a better job weighing the pros and cons and timing of this sort of stuff so that's really what beyond the sort of like obvious like illegality and of like texting about classified information i was just kind of bummed that like you know you grow up being like oh man maybe one day i'll be a national security advisor and then it's like oh wait like i I actually did a better job of this when I was 17.

2:04:59I mean, this is what Trey Siemens always says. There's, you know, you expect that there is a queue from the James Bond universe with secret gadgets and an all-knowing eye and a man in the chair and secret agents running around the globe. But in fact, there is no queue. You have to build it yourself. I got a book recommendation for you, John. So there's this book called The Wizard War by R.R.F. Jones, who was 28 years old and a PhD physicist out of Oxford when in 1939, World War II breaks out, and he is like the only scientist in the entire British intelligence community. And basically, he was a complete bull in the China shop telling everyone they were full of shit.

2:05:44And ultimately, Churchill, he got into a meeting with Churchill, and there are some, you know, 50-year-old people who are saying X, and he's like, no, it is Y, and here are the 20 reasons why it's Y. And then And because he impresses, you know, the big dog, he ends up really getting to have a big impact doing all this cool stuff around, you know, radar and targeting systems and whatnot. And it goes to show that, like, like, yes, Trey Stevens is right in that at one level, there's no there there. But it also means that, like, really excellent people at a certain point in history, when they get the right level of top cover can, like, really punch above their weight.

2:06:22and what is concerning i guess about watching the past few months of this administration is like that bench of extraordinary like like it's great if you have the extraordinary cabinet secretary um which i don't think there are any but like one level down and two levels down like you want at least the cabinet secretary to be able to note this sort of mid-level person who's really great and give them room to run and i just i'm i'm worried that's not the timeline we're living in but anyway we can talk about tech too i don't know let's talk about uh we never talk about politics on this show ever no politics so let's move on to tech and geopolitics let's talk about china you can talk about whatever you want uh yeah just maybe maybe i'd like to go a little bit uh back in time and talk about what drew you to be interested in china in the beginning i studied Mandarin in college.

2:07:19I decided instead of going to, you know, study abroad in Barcelona and just, you know, party or whatever a lot of people do in college, I decided to go to Shanghai and I was working out of a Chinese startup accelerator that was bringing sort of Western startups in, which is the most flawed idea. China accelerator in Shanghai. Yeah, sure. Yeah, yeah. It's like the most westernized - So Jordy has a ton of experience in China, and I had a layover in China once. I was there for 12 hours in Guangzhou. So you're talking to experts, so don't dumb it down for us. But some of the listeners might be less familiar, so why don't you take us through how you got into China?

2:07:59I'll give you some - I had this idea as a kid. A lot of kids wanted to be astronauts and things like that. I wanted to be an international businessman. I had this sort of extreme vision of myself with a briefcase, you know traveling to asia to do deals like that was like foundational uh memory and then i went to china and i realized one i was really frustrated that nobody really wanted to speak mandarin in shanghai because they speak shanghainese which is like a completely different dialect and so i was like what am i even doing here and so and then i very quickly like i feel like i clashed with the culture i had you know friends that were you know local chinese but overall from a from a business culture standpoint it just didn't work i felt like the entire model of the accelerator that i was working out of was flawed because they were trying to bring western companies in to build in china and we were just constantly getting blocked on everything it was like clearly china didn't want us to thrive there and we've seen this with other big companies so anyways i got a sort of bad taste in my mouth left decided never to come back stop studying mandarin uh i'm still very fascinated with it but i'm curious you know to hear about your uh kind of journey into all this sure well what was that what was the timeline what were the years this was 2016 so it was like during the trump hillary uh uh election cycle yeah okay so yeah i mean my my china arc was 2017 to 2020 and i think um i was living in beijing which is a you know different experience on it for a number of reasons than than shanghai but i also came to china wanting to work in tech i guess like my or i came to china and then very quickly it was clear to me that like the only interest interesting jobs were ultimately going to be um not in like western firms trying to enter china but this was like the hot minute where um chinese firms were trying to expand around the world and that wasn't like quite as sensitive as it ended up turning out to be so um you know working at places like ByteDance and, you know, the company that turned out to make Timu all were the sort of interesting jobs for foreigners because you were totally right.

2:10:12Like, like the alpha of being a foreigner, a foreigner doing business in China is like a 1980s, 1990s, you know, first half of the 2000s story. And then sort of your only alpha as a foreigner in China was not even like, you know, working at Microsoft China or whatever, what have you, but like helping the Chinese firms explore the rest of the world. So I moved there in 2017 for graduate school. Very quickly was like, all right, if I'm going to stay here, it's going to be working for a Chinese firm because like there's no other interesting jobs. I did that for like nine months. I think I was at Kwaisho, which was actually the first company to do short video and got completely blown out of the water by ByteDance.

2:11:01But within two months of being there, I was like, oh, this is really silly. Like they're asking me to expand into Turkey and I don't speak Turkish. And doing my podcast and newsletter when I was at work was more fun. So I kind of rode that until they realized that and fired me and then COVID happened. And I left. um so anyways i mean no good time don't regret it uh but yeah the uh the sort of the the time where there was any edge in being a western business trying to expand into china i think closed um before your or ours time well i want to go through some of the big topics that you've covered recently maybe we should start with just the foundation model battle that's going on can you give us a lay of the land over in china what's happening on the llm front all right i gotta i gotta take for you that i'm parroting from alvin wong who gave it to me the today at breakfast america created deep seek um so um there is this window uh in around 2017 or 2018 where the calculus of the top students in China about where they want to go to undergrad and where they want to do, you know, masters and PhDs changes.

2:12:19And part of it is a function of opportunities in China where wages are increasing. There's this big, exciting startup ecosystem, but there's also a big part of it of the Trump administration and just like, you know, the vibes being bad and the vibes being bad for asian americans uh you know whether that's like realized by the numbers or just amplified by chinese propaganda um and then covid where um sort of like uh china was doing fine over the course of 2020 um and america wasn't so the sort of choice and it was also very difficult to go back and forth between the two countries which you know if you're going to be deciding to like go and live halfway across the world, like you might want to see your parents every once in a while, which was not a straightforward thing during the lockdown years.

2:13:08So what used to happen pre 2016-17 is the best Chinese students would go to the tier one universities in the US, the sort of next rung down would go to the tier two universities in the US. And then the third rung down would go to the best Chinese, the best universities in China. And that was kind of a clear hierarchy. But once you had these three factors of China's economic, you know, earnings potential in China expanding, like bad vibes for Asians in America and COVID, a lot more of those sort of top folks who would have ended up wanting to go to, you know, MIT or Stanford just stayed in China.

2:13:49And the core of DeepSeek's engineering base are all under 30 and all from those top Chinese universities in that cohort. So we really messed up our shot to do this whole brain drain thing. We had a great thing going for like 40 years of really getting the best Chinese talent to come to America, get their education here. And by the way, like 85 % of the folks who end up getting PhDs in STEM in the US, either try to stay or end up staying. But by sort of screwing that up, we've really undercut ourselves, I think, for the long term. That's a good trend. What's your take now on the true cost of deep seek because it came out with this like clearly a number that that was just shockingly low and it felt like it was designed to shock the market and then more truth sort of came out over time but it's it's less you know it's less impactful when it sort of dripped out and saying well we had yeah we did have these chips and well we didn't count our uh r &d costs It was just, you know, it just seems like to me it's now unclear, but clearly was more expensive.

2:14:57Do you have a good sort of, have you sort of tried to triangulate it? Yeah, I mean, like, look, it's not dirt cheap, but they also don't have as many chips as Anthropic or OpenAI or Google. So, you know, there's some sort of triangulation that you can do. I point you guys to Nathan Lambert, who kind of did the back of the envelope math. He came up to like a like three hundred million dollar a year, like annual run rate for deep seek, something like that. Right. I mean, it's a it's a very successful quantitative hedge fund. They have money to burn, but they are also not Google. Right. Yeah. But I do think this sort of interesting angle or story from this is that there is an aspect of not necessarily like constraints breeding creativity.

2:15:46Well, there's a part of that, but also the sort of constraints lead you down different technological trees. And which is not to say that like the US or Western labs can't like explore them or the things where you're not necessarily pushing capabilities, but pushing efficiency, which I'm sure they are as they kind of reach the limits of like, oh man, like I guess we're gonna have to do a hundred billion dollar run to make our model better but i think deep sea kind of came to that earlier the sort of need to really um push on kind of the the efficiency frontier as opposed to the capability frontier because they ran out of chips before uh the likes of open ai and anthropic uh will yeah on going off of that when you're trying to understand something related to china how many different sort of data sources do you need to basically triangulate?

2:16:43Because my experience living in China, people were willing to just basically say nonsense or lies to sort of further one of their ambitions. And so I came away from that experience being like, it wasn't a very high trust dynamic between me and anything coming out of sort of specifically like uh national security you know sort of like critical critical issues i just sort of like state media anything along those lines uh you know what's the algorithm for finding yeah what what's your truth algorithm what's what's the algorithm for finding truth in silicon valley i mean i was about to say let's watch this show right yeah i mean there's a ton of hype in in western and i and i and obviously obviously every company comes out and saying we're replacing five trillion dollars of labor with our ai agents and we're doing this and we're doing that uh but but uh i do i do think it's yeah i think there are i think it's interesting in this there are sort of different heuristics you can apply to different um uh you know to different fields right so for instance jeffrey goldberg you know the equivalent of the Chinese Jeffrey Goldberg, if they were added to the, you know, war planning group, WeChat group would not have published that.

2:18:05Right. So like, I think, you know, the closer you get to kind of like, you know, national security adjacent questions, the more, yeah, you know, you're dealing with a, with an authoritarian state who has a complete control of media. And like, there, there's a whole kind of ecosystem of people who try to like read through the lines of state media and, you know, PLA journals to try to understand what this stuff means. I think for the sort of more commercial tech focused stuff. Yeah. You know, these are mostly private sector firms trying to play games and, you know, raise money, raise their next round.

2:18:44Right. I think the one difference is that there is more money that flows directly from firms to journalists in China. So the sort of discount factor that you have to apply to Chinese technology coverage is specifically positive technology coverage or even negative technology coverage, because sometimes that's like seeded by the enemy company or whatever, tends to be tends to be higher. So, you know, it's fine. And you get to know the journalists and you get to know which outlets are are more or less credible. But that, I think, is the is the main difference here. Can you talk a little bit about humanoid robots?

2:19:25I keep seeing these incredible videos of Unitree robots. There's a lot of skepticism around the American robotics companies being maybe behind or maybe teleoperating a lot. Like, what's your take right now on humanoid robotics? Yeah, specifically, does the US need to pay more attention to Unitree running this sort of DGI playbook with humanoids? um i mean i i don't know about humanoids man i mean like like like it is i think it is obvious it is pretty like we did two features on uh the chinese humanoid robotics industry and the chinese industrial robotics industry and i think the sort of the big markets in the you know three-year horizon yet say let's say are much more on the industrial robotics side but in general like we We don't build robots here.

2:20:23Yeah. And so from a from a yeah, I think any sort of like large scale manufacturing thing, whether it's Unitree or another or industrial robots or cars or what have you, like China has a really remarkable advantage in scale and manufacturing scale. And the US like it's not just the cost of labor. It's the experience. It's the network. and it's the kind of like 25 years of learning that all these firms have been doing to get to the place where they can, you know, manufacture a drone 15 times cheaper than the US can. So yeah, I think it's real. I don't really know how to solve it. I mean, you're friends with all the Gundo bros, like ask them for what they need to build a billion of these, but yeah, I'm a tough challenge.

2:21:13What's your take on the news out of Ant talking about how they've had some training model breakthroughs through leveraging what they're saying is entirely Chinese chips? Do you have a good read on that situation yet? Is it important or is it just another headline? I don't really buy it yet. I think there's a really interesting wrinkle in the sort of Chinese domestic chip manufacturing arc. So just to back up for all the viewers out there, America in October of 2020 or by the Biden administration in October of 2022 had this big export control push where they were just like, we're going to do everything on our power to.

2:21:59Well, we're going to start trying to restrict the China's ability to import semiconductor manufacturing equipment so that they would not be able to to make frontier AI chips to train the next generation of models. And kind of ever since Huawei, China's leading chip designer and SMIC, the kind of analog to TSMC, have been trying to push back against that, you know, fight through loopholes and make the sort of level of chips and the quantity of sort of the quantity and quality of chips that NVIDIA is able to do at TSMC. So, you know, it is a big open question whether or not they'll get there. I think the jury is very much still out.

2:22:45I would be kind of wary of headlines because the sort of most important there are two important facts to understand looking at this over the next three years. First, Huawei was able to manufacture an enormous amount of chips at TSMC by basically creating a shell company, TSMC, you know, deciding to look the other way about some Chinese firm manufacturing all these AI chips. And then the U.S. government catching them and be like, what the fuck? You can't do this anymore. So they have an enormous amount of supply. And so any sort of we train this on only Chinese AI chips is not actually like SMIC chips.

2:23:26It's sort of like, you know, off brand TSMC chips. So the big challenge is going to be whether SMIC can do them, can do kind of competitive chips at scale domestically. And the challenge there is they are not allowed and have not yet been able to replace electro with EUV tools, which is what ASML makes. And you can't really sneak it in. It's incredibly difficult to sort of reengineer. And that's really the final frontier for Chinese domestication. And despite a handful of headlines, I think that over the past week, I think that is much more smoke and fire. so i mean they do have a competitor to asml in smee correct and then they also need to rebuild sk hynex at some point i imagine for the for the memory in the flash right yeah i mean they were also able to stockpile an enormous amount of memory it was so awkward because there was literally a reuters article in like the summer of 2024 like bis is planning to crack down on memory and then they did it a little bit but like wrong in october and then they finally didn't fix it until like the like like uh a week before the trump administration came in so just fuck ups all around and uh yeah at some point but there's there's there's a whole lot of memory sitting sitting in warehouses and in china that they'll be good through for at least the next two years uh all right so i'm going to massively generalize here and then you can try to piece it apart and and figure out uh if there's any meaning here but uh china had you know decades to sort of embed Chinese, you know, either former or current Chinese nationals in the U.S.

2:25:16companies, which then were able to, over time, bring back sort of important information, IP in different ways to sort of like catch up on uh you know advanced uh you know basically catch up on developing their own versions of products from everything from like the f35 to phones and things like that right now china now we're in a position where like china is uh much more advanced in in in sort of manufacturing robotics some of these things that you're saying and we don't have the same benefit of being able to send a bunch of Americans over there for decades to sort of then like help us re-engineer that.

2:25:57What's the U.S.'s like actually viable strategy to kind of like catch up again? China's caught up on product development. Can we then can we catch back up on advanced manufacturing and what would be? Yeah. Is it is it possible? Right. Yeah. So the thing that I always used to hold my hat on was America attracts the best scientists and funds the most science in the world. And that is a thing that may just stop happening because the Trump administration doesn't care about the National Science Foundation, National Institutes of Health wants to blow up universities for better or for worse from their perspective.

2:26:41But like, this is the thing that won us the cold war is um getting the best immigrants and uh having them like do crazy stem stuff um and so yeah i am worried about this because that was kind of my ace in the hole is like yes um you know there will be this sort of like uh uh technology flow or sort of like human human talent flow back and forth between the u.s and china i think it's kind of like inhuman almost to cut that off. But the sort of hope and expectation is that like America is just a better place to live and folks will want to stay here and more like America will gain more from that exchange in the long run, just like what I was talking about in the sort of deep seek context.

2:27:27And when you look at, you know, a lot of the founders of these AI firms, a lot of found a lot of sort of the top research engineers, like an enormous amount, like a, I would say over 75 % of them were not born in the U S. So that is like our real superpower here is this being a country that is attractive to, and like, to a certain extent, welcomes the world's best talent and kind of giving that away. It just makes it a lot more difficult because you do need to run faster on all of these different dimensions. And the way you do that, I mean, I, I, I buy into this sort of Silicon Valley mindset that like, like sort of like there are such things as 10x engineers and you want to be able to like capture as much of them and their extraordinary founders or whatever and sort of losing out on that is is is gonna be is gonna make it a whole lot more tricky uh last question peter zaihan very popular in tech he likes to talk about how china's you know population uh is in free fall and the chinese state as we know it is is unsustainable peter zihon's one of those guys the criticism is that when you hear him talk about something you know nothing about you're like this guy knows everything he's like completely brilliant and then when you hear him talk about something you actually know about you're like what is this guy talking about i'm sure when you listen to zihon talk about china you have some thoughts but talk about you know he basically is writing them off he's saying you know yes they're force but he's sort of like writing them off long term in many ways due to the demographic issues you know do you have any comments on that what what's that madman line i don't think about you at all um i mean like i think i think in general um sort of there are nuances to everything i've said here which i have you know kind of tuned up for uh for uh our new generation of sports call on radio um i think there are demographic challenges china is not 10 000 feet tall there are definitely things that it has been really over performing on and some of the trend lines um you know some of the trend lines i think are very worried worried worrisome to washington other trend lines are very worrisome if you're running china um and kind of understanding the nuances of that and and also baking in like different potential futures of like things that america could screw up things that uh china could screw up things that america could screw up not relation indirectly to china but relation to the way it deals with the rest of the world are all i guess i gotta make the plug now the sorts of things that we explore on trying to talk our podcast we love plugs here thanks for coming on anyways for for more on that that's i guarantee you more thoughtful and engaging than peter zihon please search china talk one word and you're Chinatalk.media is the website.

2:30:20Go subscribe. Add it to your podcast player. Well, you are now our official Eastern correspondent. We'd love to have you back on. I have like 25 more questions. Energy. We could go through chips more. There's so much we could do. We'd love to have you back. Thanks so much for coming on. This is fantastic. Talk soon, guys. Talk soon. Thanks for coming on. Cheers. Bye. And we got some breaking news coming up. A big fundraising round. Over$20 million pouring into friend of the show, Pavel. Asparuhov's new startup. He should be joining in just a minute. We're excited to have him on the show to break it down for us.

2:30:56As soon as I saw the news break on X, I texted Delian three red alert emojis saying, get in this thing. Massive. And I think Delian's hopping in as well. No way. Let's go. The big brother coming to pump the little bros bags. and tell him to clean his camera yeah clean up the camera got a good view got the both the spare houses this is the first time we're ever making an appearance on anything together so you know fantastic welcome to the show guys uh break it down what's happening what's the company how much you raise what are you doing with the money so the company basically the root of it is uh healthcare providers in the united states spend a ton of time just dealing with the paperwork from insurance companies and it really both distracts from patient care so clinicians are just able to serve less patients and when something goes wrong clerically it can actually lead to like a delay in patient care so depending on like some of our customers are autism therapists and it's like that delay in care for some of those kids can really lead to adverse outcomes so what we built is basically ai that merges basically like moves data from point a to point b because fundamentally it's just it as much as you know maybe other curly hair technologists like to say it's it's not it's not as much of a systemic issue as it is a uh you know technological issue and the we're just really like ensure set up reasonable processes and have an appropriate check and balance in this workflow where you as an employer don't want to be paying like unreasonable premiums And you, as a patient, don't want to be getting care that's not medically necessary.

2:32:41But the problem is, there's a competitive space between all these insurers. There's like 10 different insurers that an individual clinician might work with. So there's 10 different processes they have to manage. So it's really about plugging these two parties, making them just work together better. We sort of raised$27 million across our seed in Series A, 5 million seed, 22 million Series A. And we were taking our capitals. we really just want to double down on our core product set. It's basically like expanding into more specialties. And really, we want to go a layer deeper into the extent that we help clinical staff.

2:33:14Today, we really just help with the clerical parts of things. But as we sort of sit between these two parties, we really start to understand insurer guidelines. We understand why Optum might reject something. And we just make sure that the insurers are able to get clean, streamlined data that has passed all the basic validation. So that's where we're bringing the capital and hiring engineers, sales operations, just really trying to scale the machine and expand on our core product set. So, Bain Capital did the deal. Did the deal get done at Fogo de Chao? You got to let me know. Oh, that was a Dallian question.

2:33:48Go ahead. No, no, that's for you because I saw you posting about it like two years ago. No, it was part of the close more so than anything else. That's what put you over the finish line. That's great. Yeah, right at the finish line. No, we were fortunate enough where this actually this deal didn't hit the market. We were fortunate enough to close it from our New York office. Fantastic. Do you have a... I think for the broader audience that are maybe not super familiar with healthcare, the way that providers have gotten paid has just kind of fundamentally changed over the past 10 years, where basically 10 years ago, provider provided care and then went to insurance companies and said, hey, here's basically what I did.

2:34:34I'd like to get paid, et cetera. And sometimes the insurance companies would look and be like, whoa, this is really out of whack. This is not what I wanted to pay for. And so you have these kind of like, you know, sort of misaligned incentives. And so Paul's whole company is focused on this like new workflow on basically with a prior authorization. So it's basically like now you have to go to the insurance company first because it's sort of like new workflow and it slows down care. Right. Because before you just go to the doctor, they'll give you the care and then you deal payments. Now the insurance company is set up in the pre-work.

2:35:01But then because that if that takes too long, now you're like slowing down the patient experience, which is also directionally like good. You don't want to be hinted with like an unexpected medical bill. right like that's a lot of the times when you hear some of these like unexpected medical bills happening it's because you don't want the check happening after the fact you do want it happening up front but like with our technology you're able to do that upfront check without necessarily delaying the patient getting care yeah if it takes like 30 days and this person needs like some cancer treatment right like you want to be able to like you know get this stuff like approved quickly and so there have been like with the rollout of this new process there's definitely been some patient backlash being like what the hell like the doctor gave me my care plan i would like to proceed.

2:35:36And I'm like waiting on my insurer to approve my ability to even go get, you know, care in the first place, you know, before the bill. And so it being fast is like super critical. The other thing that I wanted to mention is, you know, so Pavel co-founded with these two guys, Sagar, who was previously at TrueWork, but then the CEO is this guy, Jeff Morelli. It was actually my high school buddy that, you know, has known Pavel since he was, you know, sort of 14 years old. You know, the, you know, sort of first time they met, I think was like up on the ski slopes in, you know, sort of Utah, where I peer pressured smoking some weed for the first time when he was way too young to smoke weed um but allegedly allegedly allegedly uh uh you know officially according to regulators paul has never smoked marijuana um but you know i think that provided a good bonding moment and then jeff actually came and worked with me on my first company which was not in the prior authorization space or like financial services but it was actually in the health care space that's right software for autism therapists and so it's pre-existing understanding of like the field you know autism therapists, what their workflows were.

2:36:29Again, we were more focused on clinical workflow software, but it all kind of ties together of like, Jeff and I used to work together and have been friends in high school. He had known Pavel since he was sort of 14. Pavel cruxed it ramped and being in the first 25 employees and helping build out their sort of bill pay product, which has been phenomenally successful for them. And so actually both were in this co-founder dating process, like whatever it was, sort of two years ago. And I was like, guys, It's like, you guys should 100 % consider, you know, sort of, you know, working together, given the overlap of interest.

2:36:57And so in some ways, what they're working on today is like the perfect marrying of those two backgrounds of like, you know, financial, you know, sort of services and what Pavel has done and then just background and like, you know, sort of go to market in healthcare, marry the two prior authors, like this crazy background trend. And, you know, the Asperger magic can, you know, make space factories and it can, you know, you know, make patients' lives and clinicians' lives way easier. Part two, hopefully, Selna ends up way better than Nightingale ever was. I love it. uh talk about uh so we had lulu on yesterday she was talking about the golden ratio ship to yap i think it was had to have been a pretty uh intentional decision to wait and announce the company and two separate financings at the same time uh pavel you're a generational poster you know uh you know potentially poster of the year if you really get back into the game yeah uh maybe talk about that decision to not be posting 10 times a day about the company when there's probably an argument that maybe that would have helped in different ways, but clearly you made an intentional decision to just keep quiet and focus on building.

2:38:00Yeah, I think if it had meaningfully blocked the business anyway to not be talking about it, then we absolutely would have launched. But I was just like, early hiring is predominantly in network and doctors aren't on Twitter. So it wasn't necessarily that we weren't talking about what we were doing, but we weren't talking about it in front of like a tech audience i think also just there's a degree of focus that can come from downstream not being in the public eye i think it's limiting in a lot of capacities i think as we're scaling now it's from the decision now and i think part of it is just you know i think we had sort of an opportunity when we closed the a earlier than we anticipated to really just come out and like you know i'd say like a bunch of things get lost in especially in like ai hype cycles a lot of things get lost in the noise where it's like even like healthcare ai it's like is this even real what's going on here but it was i think it was really compelling to us we will come out of the door and be like hey we operate in like 45 plus states we work with hundreds of insurers we have tens of thousands of patients it felt like that was more powerful and i think it's sort of like i i think it's really important to me that like i work on something very tangible with like less I didn't want I don't want to be a hype guy I'll hide my stuff up but I want to hype it off the back of something like very real and I think we're coming today with very real business progress to show the world uh has your hiring criteria changed you're on record saying that you know two hiring criteria uh you need to have that dog in you and you need to be nice with it how has that evolved recently it's a perfect framework I don't know why you why Why would you unpack it a little bit for us?

2:39:43Break it down. What does it mean to have that dog in you? We sort of sit someone down. We just dig through every life decision they've ever made. And then after that, we sit all in a room and we go through the two avenues of like, okay, let's all start. Everyone go around. Do you think they have the dog in them? What did we learn about them to show that they have the dog in them? And then are they nice with it? That's just, you know, we sit down. You know, we hire everyone. that they're supposed to be nice with something. We don't hire a ton of like, we don't have a lot of generalist strategists around.

2:40:15It's like we have specific skill sets. And so just making sure the process sort of shows, I think it goes back to that tangibility. It's like, don't get me wrong, we do have generalist work to be done, but we always hire someone on the back of some specific tangible skill set that we can check for. That's great. That makes sense. Talk about the moment you were working on integrating GPT-3 into what you were working on at RAMP was like was that like like mind-blowing at the time did you feel like you had discovered something that uh you know discovered a broader opportunity and you just said i need to dedicate my life to creating business efficiency using artificial intelligence i guess just like talk about that talk about that moment i think there's a few things i think like it was jeff my co-founder his just like family is on like his mom's a nurse his uncle's the ceo of a hospital system so just had this like really native understanding of what the problem space was.

2:41:10I think at the time, so we were basically deploying LLMs in the context of like pulling out vendor contract data. And I think what I found in my time, Ramp is like top tier company, best of the best. I think when I was sort of looking at my domain and like just the area of FinTech, if you go talk to like a finance person about their like technology stack, they're pretty happy with it. And so part of what it was, I wanted to be able to operate in a space where the technology we were delivering was truly like revolutionary in nature, something like 10x better, not 10 % better. So I think healthcare was this like awesome moment where it was like, hey, healthcare data is fundamentally textual in nature.

2:41:50Like you can't tell me what's wrong with your knee with a bunch of like codes. You need to just like verbally explain to me what's wrong with your knee. And so the sort of combination of all these things is like actually LLMs are basically able to unlock that 10x experience and there's the funny thing that happened is that like the last big technological technological wave like web apps which is sort of like web apps and like sass tools and apis which is what a lot of the successful successful startups of like the late 2010s were um it didn't hit healthcare in the same way because frankly like a web app isn't like for a physical therapist a web app isn't like 10x better than like a filing cabinet because you're already in person there's already these physical like notes and what you're finding with lms is you're able to really drive like both technological waves in.

2:42:32So you're able to do like we're delivering a ton of value with the same sort of technical skills that I learned in developing RAMP on top of just like this AI blend is really able like you can see some of the quotes on the selenahealth.com of like we've just become like immediately this already artery and like game changer for a lot of our customers which for me is just like really engaging gets me excited to get up and work on the problem every day. One of the frameworks for looking at these startup ideas is find an industry that's highly fragmented and low NPS. Can you talk about the previous structure of the industry prior to you launching?

2:43:07Yeah, well, what I'll say is that's a great structure if you're an analytical guy, not a vibes guy. So we just like to kind of like the problem. People would talk to us for a long time about it. So that's how we land on it. But yeah, totally. It is a real fragmented market where, frankly, there was not meaningful solutions on the market that could solve this in a holistic way. There were little tools here and there that you basically had to, the fragmentation maybe is a little different in that the tools were all fragmented and you would still have to basically employ someone to go through and use those tools and run the workflows.

2:43:42Where we operate, we're just like an end-to-end solution. You plug us in, there's no tangential tools. You're able to get it. So like patient comes in, you give us their insurance card. We tell you exactly what clinical documentation we need and tell you like, hey, yep, patient clear for care, get them scheduled without having anyone on their end necessarily there to manage the process. So I think that's how we think about a lot of the consolidation that we're able to do. Do you have any advice for founders out there that are seeing your announcement today, all the money you've raised and want to copy you?

2:44:12You want to go to Fogo de Chow. Yeah, more time to Fogo de Chow, post more on Twitter. Generic advice is that like, or not generic advice. My advice, if I had to give the world is, I think Keith has said it, but I'll sort of reiterate to someone that's lived it is like, work at a great company before starting your own. I think that has been like massively helpful from like, basically like inception, we had like seed funding, it allowed us just to take a longer time horizon, however you're thinking about it. It just really shifts the model when you're talking to candidates, you're able to, I'm able to point like, hey, here's the track record.

2:44:44And I think that's something I reflect on a lot is like that Keith advice, go work at a great, Ramp was a great company, had an opportunity to work there. And I think has just made the first like year and a half of entrepreneurship a lot easier than it would have been otherwise well hopefully you provide that for the younger versions of you out there yeah we got some young we got new pobbles yeah fantastic uh last last question for you uh is there a certain milestone that you want to hit before you cut your hair is it a hundred million arr is it 500 is it a billion you just might just be the look forever growing it down your waist like look it aligns with whenever i can start tweeting whatever i want okay there we go there we go i want to see the hardcore buzz cut pop that's gonna be it it's it's a it's primarily like you want someone pretty quickly when they see me to be like ah that guy that guy works with computers yeah yeah everything's computer now uh it's great it's great having you on yeah you're our new healthcare expert.

2:45:43Fantastic. Congratulations. No, it's been, it's been, I remember, I remember I came over to Will's office. It was just you sitting there by yourself. You told me roughly what you were working on. It's fantastic to see all the progress and I'm, yeah, as Joe, as Joe Rogan would say, it's an honor to, you know, cover your fundraising announcement yeah exactly thanks for having me on guys cheers bye and see you delian later couldn't get into wording edgewise but it's so funny to be like yeah little bro i'm coming on your fundraising announcement i love it i love it that's the nature of the call-in show he's just in the text message group can i hop in just to hype up pavel there we go no i mean i can't i can't uh, Pavel's smart enough to know that he should leverage every single advantage that you have in life and having a big brother like Delian, who can be your hype man, who can help you avoid pitfalls, help you make sure you're actually focused on the racing, help you avoid bad investors, et cetera.

2:46:50I mean, there's another thing that, that he's really good at leveraging and that's eight sleep nights that fuel your best days, turn any bed into the ultimate sleeping experience. Go to T go to eight sleep.com slash TVPN, $350 off your pod. Uh, that fuels your day i saw andrew posted a hundred sleep score oh no devastating i don't think i'm anywhere near there i woke up at like 4 a.m unintentionally i actually i actually did put up a hundred last night which is crazy oh you prepped this um okay so uh 43 we have somebody joining the show we have exactly and don't don't say any names so this is somebody named carried no interest they are a prolific poster yep on x you're gonna hear their voice you won't see their face quite the following and uh he's going to come on and talk about the the situation with all these ai sdrs all these companies saying they're going to automate outbound and then very exciting he's going to dox himself in like two weeks let's go live on the show live on the show so i'm very excited for that but let's bring him in this reveal let's bring him in he's coming down well in the meantime we can talk about wander find your happy place find your happy place book a Wander with inspiring views, hotel-grade amenities, dreamy beds, top-tier cleaning, and 24-7 concierge service.

2:48:05It's a vacation home, but better, folks. Go to Wander.com. Use code TBPN. However good you think it is. Could be better. It's better. Could be better. We've taken you on a whirlwind tour of the world today. We've taken you to China. We've taken you to the East Coast. We got carried. No better place to be than Wander. Welcome to the show, Kerry. Amazing picture. I have arrived. Great picture. I have arrived. How are you doing, by the way? My hair is wonderful right now, too. I want to show it off so bad. But you sound, I mean, are you doing a Danny DeVito impression right now? You sound kind of like him.

2:48:39You like that? No, just a lot of smokes, boys. That's all. I've almost said your name 20 times already. But anyways, for everybody, this is Terry. Carried no interest. He is a private equity investor skewing towards software, former head of AI at a billion-dollar PE fund, and doing a bunch of interesting stuff in SaaS and looking at businesses as well that are using AI to sort of reinvent themselves. But you were chirping on the timeline earlier today about 11X, wanted to just have you on. I don't want to pile on 11X too hard, but I do want to talk about the broader sort of like sales automation space.

2:49:25What's going on with AI SDR? So here's my hot take, right? Like some, some software companies will be AI first and succeed massively. I think that the notion of the AI SDR is flawed permanently, whether it's 11X, whether it's some of the ones from Y Combinator. And there's a few different reasons. Like the first reason to me is that cold email is functionally like an alpha game. You are constantly trying to take advantage of a bunch of different quirks about cold email so that you can send five to ten thousand a day and when you abstract all of these quirks away i know there's a bunch of cold email wizards that will agree with me you actually lose some of that alpha when you just say hey here's this tech company i'm gonna let you run large-scale cold email very tricky right very hard that's the first piece that i just don't love the other piece is like when you think about when you think about it to me there's five reasons that make it tricky The first reason with these AISDRs, you're relying on someone else's cold email data.

2:50:28You can guess what happens to your gross margin when that occurs, right? So if you're an AISDR company, you have this big database of emails, you're mooching off somebody, you're going to take a hit on gross margin just there right away, right? The second issue is that, in my opinion, you have a high probability of potentially being embarrassed. so like embarrassing the end customer right both right you have this ai that is sending out emails who knows who it targets you know that's a tricky situation right when you think about the ai utility relative to the magnitude of mistake coogan's law i have to find a way to coin this i really do when you think about that ratio let's think about uh cursor really quickly right you get all of this instant efficiency from cursor you get more code written if you know anything about developer environments if you push bad code it should get caught in testing the magnitude of the mistake relative to the efficiency gain of the ai is very low you get all this output the mistake is caught before it goes to prod win-win for everybody right on the aisdr front no such thing right we're doing it live yeah we talked about this it's a good point like there's an opportunity for a high degree of embarrassment.

2:51:46And I think that that is actually leading to a lot of churn. So I've seen like behind the scenes on a few of these businesses, the churn does not resemble like top enterprise software companies. It simply doesn't. Well, yeah. And one of the issues is you wouldn't want to use an AISDR on a very important account because let's say you're trying to close an account that could be worth$2 million a year. Well, is it worth any potential embarrassment to just spam them with a bunch of emails where it's like hey i saw you live in new york have you checked out central park you should see a broadway show right like it's like it's just not worth it it's like hey this could be yeah you know just put a human on it or at least keep a human in the loop yeah yeah and i don't think it's an 11x problem by the way right i think it's a entire notion of the idea problem here's another tricky part let's talk about and i you us three have talked about this privately but like you only grow to$100 million in ARR the way Cursor did by being self-serve, right?

2:52:45And some of these AI first companies are incredibly self-serve, meaning your CAC is extremely low. Your onboarding time is very low. You can grow really quickly. That's a double-edged sword for a bunch of different reasons, right? But now let's think about the AI SDR. Not only do you have this high potential for a mistake, the onboarding is a whole thing. You need like a full customer success team. You You need constant check-ins. The amount of OPEX you're dedicating to maintaining an existing customer with a bad churn rate, that is not the profile of an excellent software business. Does that make sense?

2:53:20Yeah, yeah. I mean, overall, I feel like the risk to what AI is doing to these high-growth startups is that we're seeing conversion rates go up, ARRs skyrocket. but churn rate also goes up. And that's the real underlying question here because we have so few months of churn data on this new generation of companies that look very different and have different switching costs and different installation costs. And there's a new hot model every two weeks. And so people are bouncing around a lot. And so there's like three buckets to me as like a very boring software investor. You have your very high self-serve, very sticky, low ACV and a low CAC.

2:54:02That is cursor. If I remember correctly, I don't know if they spent a dime on marketing, right? A couple of weeks ago, they said they'd never spent a dime on marketing, but at some point that will change, I'm sure. Yeah. And so think about that. You're high self-serve. You have no customer success. You're very sticky. Your contract sizes aren't big, but it doesn't matter because your CAC is low. That's a hundred million of ARR in two years, right? Now let's think about a business like Salesforce, non-self-serve, extremely high ACV, and very sticky. Also a good software business. Now let's think about an AISDR software company.

2:54:40No self-serve, many touch points, worse gross margin because you have LLM calls and you're depending on somebody else's email and contact database. High CAC because, again, you don't have this amazing self-serve option. And as we all know now, bad churn. That's not it. What is, in your view, the future of enterprise sales broadly? Is it just back to basics, golf courses, car clubs? You know, you're just, you know, bro-ing down and, you know, you meet, you just become boys with the buyer. Yeah, Le Mans, the best deals in software we've done at Le Mans and F1 and all these different places. I think there's no substitute for that, Jordy, for a million dollar contract.

2:55:26There's no substitute. What I do want to highlight is on the notion of the AISDR, the idea of LLMs automatically market mapping and targeting your personas, but not sending the emails is obviously high utility. Right. Like that is a good thing. So I think that the future of like really high ticket software sales is probably LLM assisted market mapping and like persona identification. Right. And then the golf course. Right. I love it. The only problem is that first step, that's not a venture backable company, gentlemen. That's a really good feature of ZoomInfo or Apollo or any new market entrant.

2:56:09Right. What do you think about the cursor model for SDRs? And so it's something, I remember there was a company called Streak that was a CRM that plugged into Gmail and it was very self-serve. And the idea was you're a small company. Maybe you've just been tasked with sales. You don't even have budget from your boss. You just want to speed things up. You plug into Streak in your Gmail account and all of a sudden you can do some mail merge and some automation. cursor for SDRs might look like some email generation functionality, but it's very much that centaur model where the human's working alongside the AI.

2:56:46Could that be the next hundred million ARR company in the next few months? Well, yeah. And to be clear that the sort of like AI sales co-pilot probably has 50 companies running at it. But I'm curious. No, I think we're actually the first ones to ever think of that. Yes. Let's incorporate right now. You know, I like to think about this. Cougan's law, this also needs to be coined. I don't know what to call it yet. For an AI product, how many times per day does it call an LLM and derive utility? So let's think about cursor. You're constantly coding, maybe three hours of deep coding work a day. You're hitting an LLM API constantly or at least once per 10 minutes, let's just say.

2:57:31Great, AI first software, sticky. Let's go back to what you said with the notion of an AISDR self-serve. To me, the utility is how many times are you really hitting an LLM per hour? right i don't know right and so to me i i think that there is going to be a self-serve ai sdr feature that is nice happenstance from why combinator did catch my eye i don't know if you guys saw that no great tweet about it caught my eye doesn't seem like a hundred million dollar ar business to me yet right we'll see good luck to them you know i think happenstance is very cool i don't see it being a hundred million dollars of ar uh this year or next year right so Gauntlet's been thrown.

2:58:12Last question. You got to hit 100 million and come on the show to prove carried no interest wrong. Prove me wrong. Last question. Our mutual friend, Jeremy Giffon, likes to talk about the sort of iron law of the business universe, which is like if you grow revenue just shockingly quickly, eventually, you know, you might fall back to earth or you could potentially lose it just as quickly. So what's your take on, you know, generally on some of these various the cursors, the windsurfs, etc. Do you think that revenue, do you think they can get to a point where they sort of have a durable moat or are they going to just be forever relegated to, you know, extreme competition?

2:59:00I get a lot of I have a lot of VCs who I talk to in my network that ask me that all the time. Right. You know, here's the real question, and I think let's just cut straight to it. If cursor hits 300 or 400 million dollars of revenue, could the IPO and would the share price be supported? Right. Let's cut all the way through it. Right. And and and I think that the answer is it could go the way of slack. Right. It's a double edged sword. And I think Jeremy's right. My love. Shout out to Jeremy. I think he's completely right. It's a double edged sword. There's no way around it. Right. That as soon as you gain that person as a customer, you could just as easily lose them.

2:59:38I think that there could be a Slack Teams situation that plays out with Cursor. That classic Slack is amazing. Slack is the trailblazer. And all of a sudden, everybody realizes Teams is just fine. And Microsoft just decides it's time to come for them. I think the same issue could happen with Cursor on a variety of dimensions. um yeah i i can't say with any confidence that cursor is gonna ipo i do think it could get acquired for a like gangbusters deal like insane right i don't think it's an ipo worthy company given the churn rate and the the the potential for microsoft or any any of the big kind of like tech distribution companies to to go at them i think that it's a double-edged sword i could eat all those words they could ibo next year what do i know right we'll see uh we gotta get on with Taipei it's been fantastic having you close out the show with us let uh let the audience know to go give us five stars on uh iTunes and Spotify or not iTunes Apple podcast Apple podcasts five stars five stars for these five stars thank you everyone said it thank you for joining the show we'll see you tomorrow everybody take care bye